In my previous post two months ago, I predicted economically things were to get worse before they would improve. Other than a few blips on the radar, so far, I have been proven wrong.
Actually, a flight to safety in the bond market makes mortgage rates go down, which in my opinion is always good.
We still see a lot of folks buying homes and locking in a low fixed rate mortgage. The 30 year VA rate is at 3.375% this morning.
So, with WSJ Prime rate at 4.00% and predicted to go higher as the Fed raises the rate, why would anyone have a Home Equity Line of Credit (HELOC) tied to Prime?
The logical answer is to combine the first mortgage balance and HELOC into ONE fixed rate mortgage before rates get worse.
If the FED begins unloading its balance sheet that is filled with Mortgage Backed Securities (MBSs) they bought during the stimulus years and post FNMA collapse, you will DEFINITELY see an increase in mortgage rates! Excess supply and no demand is a recipe for higher mortgage rates.