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Janeese Jackson's Blog

By Janeese Jackson | Broker in Portland, OR

Interest Rates Make a Big Jump this Morning!!!

"The Heat is ON!!" - Glenn Frey

Our housing market has enjoyed the benefits of historically LOW, LOW rates for quite some time now.  And, complacency can be the enemy of building wealth.  This morning we've seen the largest swing in mortgage interest rates thus far ALL YEAR!  Treasuries continue their negative slide this morning (and as US Treasury notes slide, mortgage rates tend to rise)!!  So far (at 9am), rates are up .125%.  It may not sound like much but it can affect both the amount you will pay in a mortgage and may also affect the buyer's ability to purchase!!  This morning the 10 year treasury note hit 1.86% in very early trading.  Since last Friday's employment report (stating that the unemployment rate had dipped again to 7.6%), the 10-year treasury note has increased 22 basis points (bp) in rate, that's a size-able move in a short time.  30-year mortgage rates have increased 10 bp in rate.

According to Investopedia, a basic point (bp) unit is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security. The relationship between percentage changes and basis points can be summarized as follows: 1% change = 100 basis points, and 0.01% = 1 basis point.  So, a bond whose yield increases from 5% to 5.5% is said to increase by 50 basis points; or interest rates that have risen 1% are said to have increased by 100 basis points.

Anyway, all financial jargon aside, the bottom line is if you are considering a purchase or sale of a primary residence, investment property or simply refinancing an existing mortgage loan, I'd get on it!!!  As this can and will affect buyers AND sellers!!!


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