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Mortgage Rates Tack On One-Half-Percent For The Second Time In A Week

June 2, 2009 by Scott Kinne

University of Michigan Consumer Sentiment Survey May 2009Mortgage 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.

Filed Under: Uncategorized

Scott Kinne

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NMLS ID #182351
Office: 703.293.6146
Mobile: 571.237.6241
Fax: 571.317.2478
skinne@fhmtg.com

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