It is official!

The dreaded day has come and gone. The FED has officially exited the mortgage secondary market and (for the time being) ceased propping up an entire industry. What does this mean for you as a realtor or as a buyer/seller?

First things first. Rates WILL go higher. This is understood. What is not understood at this point is how much higher they will go and how quickly. We at Crystal Clear Mortgage, along with other market participants, expect rates to move upward but not at alarming levels. I expect the best interest rates to be around 5.5% within the next 30 days on 30 year notes. This will scare some buyers but it is our new reality. You snooze you lose.

There will be a tremendous amount of volatility in the near future regarding mortgage rates. Price worsening will be harder to predict. The reason for this is Private investors are now entering the market for the first time in a long time without the security of the FED. They will be in a "feeling out" mode to try and even out supply and demand and the price points that create this equilibrium. It is quite possible that a quote on one day can be .25% better or worse than the day before. Prepare your buyers for this. IF YOU HAVE A HOME UNDER CONTRACT, LOCK IN YOUR RATE TODAY AND FORGET ABOUT IT. BY THE TIME YOU CLOSE YOU WILL HAVE A BELOW MARKET INTEREST RATE. THE TIME TO BEAT UP YOUR LENDERS ON RATE, OR WAIT FOR RATES TO GET BETTER HAS DISAPPEARED.

I am also recommending longer term rate locks for the first time ever. Usually the best rates are had on 30 day locks, with rate adjustments the longer out you lock. If you have a buyer or are a buyer but have a closing 45-60 days away, LOCK. Once again, by the time you close, odds are you will have a below market rate even after taking a slight hit for the piece of mind.