ORLANDO, Fla. — Mortgage lenders were taken for quite a ride over the past three days as rates fell dramatically, then recovered nearly all their losses by the end of Wednesday.
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At the start of business on Monday, the 30-year average interest rate was 4.18%. By Tuesday night, it had fallen to 3.9%, a steeper two-day drop than any point since the start of the pandemic.
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Lenders said the Russian invasion of Ukraine and subsequent sanctions on the superpower caused investor jitters.
“Call it a safety flight,” Bank of England’s Andrew Yoeger explained. “Like, I’m having an investment that has risk… I put it in the mortgage-backed securities, I put it into treasuries, which helps rates get better at that point.”
However, the trend was fleeting. Yoeger said the lack of a major promise to tamp down on rising gas prices during President Biden’s State of the Union address sparked fears over renewed inflation, pushing the rate in the other direction.
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By Wednesday afternoon, the rate was 4.11%, almost as high as it had been the week before.
While the volatility is not helpful for anyone trying to buy or refinance their home, Yoeger said both groups could devise clear, but different game plans.
Those looking to refinance should wait a year, when the mortgage interest rate is projected to return to 3% after the Federal Reserve hikes its funds rate in hopes of slowing down the economy and inflation.
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However, he said people looking to buy should do so immediately, because they’ll lose money waiting for the rate to fall again due to the rising cost of housing.
“Would you rather pay $2,000 right now over the course of the next four months, or do you want to pay $40,000 next year?” he asked, hypothetically, while shrugging his shoulders. “Buy today. And if you can buy one, try to buy two.”
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