Mortgage rates soared again Monday, tacking on a half-percent in a day for the second time in under a week.
Each half-percent adds $62 to a $200,000 home loan’s monthly payment, or $744 per year.
For home buyers recently under contract, it’s a gut-wrenching time to be shopping for a home loan. Morning mortgage rates have been typically gone by early-afternoon and — in some cases — lenders have changed rates five times in one-day span.
The reasons for surge in rates are varied, but each is related to the idea that the economic recession may be nearing its end.
- Consumer optimism is as high as it’s been all year
- Consumer spending is falling at a slower pace than in months prior
- China’s factories reported an expansion in business
Each of these points bodes well for the economy and pushes Wall Street investors towards more risky investments. As a result, “safe” investments get sold — including mortgage-backed bonds, the basis for conforming mortgage rates.
For as long as the future of the economy remains in question, expect mortgage rates to remain volatile. We won’t get half-point rate swings or five pricings in a day every day, but both are becoming more common.
Be careful when shopping for a mortgage — the rate you’re quoted may not last long.