You don’t have to look far to see how far interest rates have climbed, dropped, climbed, dropped and everything in between over the past decade. More recently we have been faced with a time of government stimulation of interest rates through their investments into mortgage backed securities. Politics aside, this activity cannot sustain itself forever and at the end of the day… interest rates are still market driven.
For the purpose of illustration I have included some charts tracking the FNMA 30 year 4.5% coupon. Keep in mind when this goes “up” rates get lower and when this goes “down” rates increase. So up is good for rates and down is not (think climb vs. crash!)
You can see that the beginning of 2008 things were getting ugly fast and right towards the end of the year in November of 2008 we saw the coupon take a leap and the market breathed a sigh of relief.
As you can see rates were literally lifted from the 90 bps to 98 bps range to the 97-103bps range within a matter of days. You can also see how we don’t have much room to gain for the better but plenty of room to fall. I will continue to say, the clock is ticking on these rates and we are standing near the edge of a cliff. Look at the image and imagine it is a picture of a roller coaster….. what would instinct tell you is next? The images speak for themselves… now is not the time to be “iffy” about buying or refinancing, if it is in your plans…take action and take advantage of the times we are living in. If not, make sure you share this information with those you like and care about.
For any specific questions, I can be reached at Rafael@thehomemap.com
Here is today’s up close look on the FNMA 4.5% coupon:
