An amazing runup in mortgage rates in recent weeks from an average of 4.75% to over 5.25% has many prospective refinancers scratching their heads asking themselves what happened? It also has many refinancers-in-progress wielding pitchforks and hurling stones at the mortgage companies who are allegedly letting their locks expire since the rates have jumped substantially and they no longer want to honor the initial commitments. There are two sides to this coin though; consider the notion of breaking your mortgage lock when rates drop post-lock, right? As aggravating as it must be when a customer breaks a lock, can you imagine how angry you'd be if you locked in a 4.x rate only to have it expire while the mortgage company dilly-dallied with your appraisal and underwriting and said, "Oh well, you'll have to go with today's rate at 5.5% now"?

This rise in rates shouldn't be a complete surprise, given the substantial rise in Treasury yields (the easiest money I've made this year was a 2x Short Treasury ETF) as investors depart the safe haven of Treasuries at the expense of negative to very low yields for stocks and bonds.

Is it Too Late?

I'm no better at predicting mortgage rate trends than the next guy, but why wait any longer? People that held out for rates going to 4% (see the only way I've heard of to get a 3.99% rate) are now faced with "mortgage envy". At this point, the best you can do is comparison shop using the methods I've outlined here and make sure to construct a Net Present Value model to compare your various mortgage options. You can get several quotes in your area and get free quotes: Mortgage Calculator.

How Did I Do?

In my Mortgage NPV article, I outlined how I got the following deal recently.

- 4.625%

-30 year conventional

-no points

-reasonable fees (actually, the lowest fees of all the options I considered as well).

I realize that was at an optimal trough in the rate trend, but if you're looking to refi now and realize by waiting any longer, your opportunity to lock in an attractive spread in current vs. new rates is slipping away, you can easily apply the same principles for an optimal outcome.


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