Dow rally this week drives mortgage rates up

While the best mortgage rates out there for those borrowers with the best credit scores, and highest levels of equity, still hover around the 5% mark for 30 year fixed rate loans, those who do not qualify for best rates might have to accept a slightly higher rate today.

The market is a little more subdued this morning. The DOW is just under 10,000, though trading on Wall Street is volatile. Initially equities fell, based on earnings reports from Citigroup that showed higher write downs than expected.

Other economic news also disappointed a bit. Unemployment applications dropped to just below the 525,000 level that was expected to 524,000. But good news from Goldman Sachs has the DOW moving up and down this morning.

The NASDAQ is down about 12 points, and the S & P is down about 5 points. The yield on the 10 year bond rose to as high as 3.47% yesterday, which pushed mortgage rates up. The yield currently stands at 3.42%, so mortgage rates have dropped back slightly as well.

Nevertheless, the yield is up significantly from the low last week at 3.16%. Mortgage rates under 5% have all but disappeared for now.

As the value of the U.S. dollar continues to drop against the Euro and the British pound, investor money continues the move into commodities such as oil and gold.

Hang onto your hats for the coming weeks. It appears that volatility will remain the buzzword on Wall Street, so mortgage rates might be expected to be moving up and down up to several times a day. If you have a loan in process, let your loan officer know where you would like to lock your rate, and hopefully he/she will be able to hit your target.

We will have to keep watch to see if the current mortgage rates drop again, or if the Feds increase their purchase of mortgage backed securities to keep mortgage rates low. That coveted 4.5% rate for 30 year fixed rate mortgages remains elusive.

Written by Shelby Bateson