Why are rates going high so fast?

This should give you some answers to the recent spike in Rates...... Mortgage Rates Weekly ~ http://www.mortgagenewsdaily.com/reports/weekly_mortgage_rates/#{uname=gsantoro}

You are asking a bunch of good questions...without getting too technical, mortgage rates are directly tied to the the prices of Mortgage Backed Securities (MBS). These MBS are bonds. Bonds have a PRICE and YIELD and they move in opposite directions, meaning when a bond's price is going up the yield falls and vice versa. You can think of the yield on MBS as the rate you would pay as a consumer for your mortgage loan. There has been an EXCESSIVE amount of selling in the bond markets since May 1 and most of it surrounds the anticipation that the Federal Reserve will BEGIN to reduce the pace at which they pruchase these securities to end what is commonly referred to as QE3. This selling is what has driven rates higher. The bond markets have begun to price in what they are calling the tapering of these purchases. Our opinion is that the markets have overreacted. However, that doesn't mean anythning since the markets can remain irrtational longer than we can remain solvent. You probably have missed the best rates. Whether the rates get better or worse from current levels is something everyone in the markets is trying to figure out.

MMG Update + By The Number$ - Monday - June 24, 2013, 10:06am ETCurrent trend Direction: LowerAdvise your Clients: Locking as Bonds continue to drop under heavy selling pressure withno sign of a bottomCurrent Price of FNMA 3.5% Bond: $99.41, -91bpStocks and Bonds are getting clobbered once again. Besides the usual suspects - like theFed taking away the punchbowl - China is a huge problem this AM as reports haveemerged that the country's banking system is in a cash crunch. This follows a Moody'sdowngrade on Hong Kong's banking system as well as negative comments from GoldmanSachs this morning.We all knew rates would go higher at some point - but this move higher was violent innature - with Bond mutual fund redemptions fueling an already quick selloff. Since May 1,the yield on the 10-Year Note has risen from 1.63% to 2.63% and at the same time, the3.5% coupon has shed 734bp. Whoa!

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Rates are indeed going up, and there is not much chance that they will be dropping back into the 3's again (at least not in foreseeable future). Please remember that historically mortgage rates have been in the 6-7% range, so if you are looking at buying, you would still be doing quite well by historic measures. You need to find a local, licensed mortgage professional and work with them to find out what the best program would be for you in your situation.

Rates have definitely risen over the past few weeks. While no one can give a definitive answer as to whether rates will be falling back to their lows, it seems unlikely that it would happen. One major reason that rates have been so low is that the Federal Reserve has been infusing massive amounts of cash into the market, at a clip of about $85 Billion per month. This kept interest rates artificially low. The FED has signaled that it is considering cutting back on these cash infusions at its past two meetings, thereby giving the market cause to panic and sell bonds. Bond prices have dropped almost 750 basis points in the past few weeks, which has caused the rates to shoot through the ceiling.The question for you is whether you can meet your goals in the current rate environment. Many people who were waiting for lower rates to refinance have found that they can still save hundreds each month by refinancing now. Those who are looking at buying homes are pulling the trigger in order to take advantage of home prices before they continue to rise.

Good answers below - MBS massive sell-off's, increase in 10 Yr Bond yield, comments from Fed to start tapering Quantitative Easing, worries on China economy & more. Rates are still in a historically great place - get your loan locked while rates in the 4's are still availalble. Like said below, it is still a great time to save $$ by refinancing and still a great time to buy!