For many homebuyers, a thirty year fixed term mortgage and a rate of 4% is a line that they just won’t go over. But as of June of this year, some lenders have already raised the rate to 4.125% for a conventional 30 year mortgage on a fixed rate. These higher rates can be attributed to the relationship that the domestic market has with
For some homebuyers, the 4.00 percent 30-year fixed mortgage rate is a line in the sand they have no intention of crossing. As of June 2, 2015, some lenders are already charging 4.125 percent for a benchmark conventional 30-year fixed rate mortgage, according to Mortgage News Daily's Chief Operating Officer Matthew Graham. News stories that discussed a possible debt from Greece had a direct effect on European rates. "The more it looks like Greece will get some sort of 'deal," says Graham, "the higher rates go in the stable countries, and it's those countries that have the most direct effect on US rates."
So, those who are currently shopping for loans may want to lock in the rate that they have received before the figures go any higher. “It might seem like exactly the opposite things you need to do,” says Amy Kite of The Kite Team. “But you should seriously consider locking in your mortgage interest rates before they go any higher.”
But what does locking a rate actually mean? It means that during the lock period, the lender will not able to raise the rate (or lower it as well). That means that you are taking a chance that you will be saving money. If rates go down and you have it locked in, you will pay more interest than you would have.
You are able to lock in a rate at any time after you have applied for the loan and been preapproved by the lender. Bankrate.com lists the lock periods as 30 days, 45 days, 60 days and 90 days. The longer the lock period is, the more money you’ll have to pay for the loan, so most people wait until the last minute to lock in their rate and consumers often think that the best time to lock in a good rate is when rates drop. But according to Kite, when you’re in a volatile market, the opposite is true.
Of course, it is impossible to predict what the rates truly are going to do, but consumers can lock in a rate that they can live with before it becomes one that they can’t, and even though some people may want to make educated guesses on whether rates will rise of drop, the point is, they are still guesses and locking in your mortgage rate takes all of the guess work out of the process and allows a rate to be finalized.
There is a race going on right now because major world banking institutions to devalue the currency and lower the interest rates. But according to Graham, the reason that the rates might actually increase instead of drop, and the reason why realtors are recommending that buyers lock in rates because they are of the opinion that they are going to rise, has to do with the fact that there will be a major shift in the global economy and that rates will go higher as a result.
The problem is, this leaves the buyer caught right in the middle. The markets are fluctuating and while you might go ahead and weigh the available information and try to make a guess as to what is going to happen you probably shouldn’t leave it to chance. What you can do is get in touch with your lender and create a strategy that you will follow for the loan. If you have a good lender they will keep an eye on the market and give you the benefit of their informed opinion, as well as any other information that they have access to so that they can get you the best rate possible.
