Stacey 16 Mar 2021

For those who have been considering applying for a mortgage, the window of golden opportunity may be coming to a close. Although they remain low, mortgage rates have begun to increase and are expected to rise further later in the year. Since the pandemic hit, home buyers and homeowners have been taking advantage of record-low mortgage interest rates that have helped keep their monthly mortgage payments down. However, forever-dropping rates had to come to an end sometime and that time may be now. In order to understand what’s causing these shifts in interest rates, it’s important to understand the US bond market.

What’s Affecting Interest Rates?

Interest rates are rising because of expectations for better economic growth, and they are expected to continue to increase, though moderately. Understanding the 10-year treasury yield is key to understanding what the economy is likely to do, since the 10-year impacts mortgages and other consumer and business loans. In February, treasury yields began to quickly rise and though a March 10th auction brought rates back down, this may be a sign of changes to come in the financial market.

What do High Interest Rates mean for Mortgages?

A rise in interest rates generally results in a decrease in mortgage applications. In fact, this is what trends are showing early March; applications for mortgages decreased 1.3% in the past week as mortgage rates hit the highest point since last July (3.26%). However, interest in home purchasing remains high as the spring selling season approaches. The seasonally adjusted purchasing index increased 7% the first week of March. Gains are seen in both conventional and government applications. Overall activity was just 2.4 percent higher than a year ago at this time, and loan sizes moderated for the second straight week. The latter may be a sign that more first-time buyers are entering the market.

Higher interest rates also take a toll on borrowers who are less likely to refinance; the demand for mortgage refinancing is 43% lower than it was a year ago. This number is 5% lower than it was as recently as the end of February. Last year at this time mortgage rates fell dramatically as fears of the coronavirus hit financial markets causing a large spike in refinance demand.

As mortgage rates loosely follow the yield on a 10-year Treasury bond, many are watching to see what the coming weeks hold as we enter the spring buying season.

Understanding Escrow

Escrow is a legal arrangement in which a third party, like Anchor Seaport Escrow, temporarily holds large sums money or property until a particular condition has been met, such as the fulfillment of a purchase agreement. When dealing with such large purchases, it’s important to work with a trusted escrow company. Anchor Seaport Escrow is independently owned and operated and has been serving the real estate community of Souther California communities such as Long Beach, Huntington Beach, Lakewood, and Signal Hill for over 40 dedicated years. We help buyers, sellers, and realtors with their escrow needs, proving the comfort and reassurance our clients have come to count on. Being a 100% neutral company means we are licensed, independent and not affiliated with a real estate broker. Contact us here now to learn more about our services.

California's Rising Mortgage Interest Rates
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California's Rising Mortgage Interest Rates
Refinancing or buying a new home? Low-interest rates albeit going up are still lower than it was last year. There shouldn't be a need to hold back. Our escrow services are here for you at all times.
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Anchor Seaport Escrow
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