Posted on 07/22/2003 7:15:05 PM PDT by Brian S
By Richard Leong
NEW YORK (Reuters) - Americans, unnerved that they may be about to miss out on the lowest mortgage rates in their lifetime, are working their phones and computers to lock in rates before they head even higher.
In less than a month interest rates on 30-year fixed-rate mortgages, the most popular home loan in the United States, have risen half a percentage point from their 45-year lows.
Mortgage rates closely track the U.S. Treasuries market, where yields on the benchmark 10-year note have spiked in the last month in the wake of the upbeat economic outlook the Federal Reserve made at the end of its last policy meeting.
While there has been an overall pickup in requests to lock in rates, the increase in volume has varied among lenders.
At Quicken Loans in Livonia, Michigan, 80 percent of its clients are locked in their rates, up from 70 percent from a few weeks ago.
"It's a pretty good jump. We've seen a shift in borrowers' mentality," said Bob Walters, Quicken Loans' vice president.
Prior the current spike, some borrowers, mainly those looking to refinance existing loans at a lower rate, had been taking their time locking in rates, fishing for the lowest one before committing to a loan.
Some fence-sitters may still be holding out for rates to head lower again, perhaps recalling late last year when there was a widespread call to lock in rates because rates could not possibly decline further. Economists had predicted rates would edge up because the economy was poised to pick up steam this year. As it turned out, rates slid to 45-year lows.
"There are fence-sitters waiting for the bottom. We may have seen the bottom," Greg Fayegh, senior vice-president at the home loan group at Washington Mutual Inc. , the No. 1 U.S. mortgage lender so far this year.
DON'T PANIC
On Tuesday, yields on 10-year Treasury notes were at 4.19 percent, just shy of 4.21 percent high for the year hit on Monday. The yield on the 10-year note has climbed more than a percentage point since mid-June.
Average 30-year mortgage rate bounced up to 5.67 percent, up more almost half a percentage point during the same time to its highest weekly level since early May, Freddie Mac said.
On a $200,000 mortgage, the rate increase spells $62 more in monthly payments.
If it is too late to catch the lowest rates, lenders collectively say: "Don't panic."
Mortgage rates, despite the upswing, are three-quarter of a percentage point lower than a year ago.
"If you missed the bottom, you missed the bottom," said Brian Hale, executive vice president at Countrywide Financial Corp. . "Fixed rates are still at historical lows."
"No one can predict these rates," Hale said.
Lenders suggest to lock these rates now, even if the Treasury market rallies, leading their yields to fall and pulling mortgage rates downward again.
"Now it's always the best time," Washington Mutual's Fayegh said.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.