Mortgage Rate Update June 9, 2016

Mortgage rates remain at multi-year lows.

There is no shortage of fear in the marketplace about interest rates rising as a result of the Fed hiking short-term interest rates.  I overheard a conversation yesterday in which a real estate professional was advising a prospective homebuyer to buy a home sooner rather than later because mortgage rates were almost certain to be higher in the future.

It is true that mortgage rates may be higher a year from now but Fed rate hikes will not be the primary cause.  The Fed does not directly set mortgage rates.  Case in point:  The Fed last hiked short term interest rates in December 2015 and mortgage rates are presently ~.375% lower than then.  The yield on the US 10-year treasury yield has decreased by ~.50%.

Equally as feared is that home prices will fall since they have been on a such a rapid ascent.  CoreLogic released its most recent Home Price Insights report earlier in the weak.  The report showed that home prices in Oregon increased by 10.3% in the past 12 months.  Furthermore, the report forecasts that in the next 12 months home prices will increase by 7.4%.  You can download the report HERE.

From a technical perspective momentum in the interest rate markets are working in our favor.  I will shift to a floating position.

Current Outlook: floating