If you’re currently shopping for a mortgage rate, you’re probably lighting a candle for lower oil prices.
The rise in crude oil has pushed up inflation expectations, which is never good for interest rates.
In basis points, most fixed-rate mortgage rates rose by double digits last week. (Variables remain stable.)
Somehow, a handful of providers are still sticking to interest rates near or below four percent for a five-year fixed term, especially for default-insured borrowers.
Think about the term carefully
If you’re torn between a three-year fixed loan and a five-year fixed loan – the mortgage argument currently prevalent across the nation – here are a few things worth considering.
First, consider how long you actually need the mortgage for and whether you want to borrow more or move before the five years are up.
If there is a reasonable likelihood that you will need to make changes before five years, spend less time admiring the lender’s shiny, discounted interest rate and more time examining the contract’s prepayment penalty formula, early refinance options, portability clause and interest rate transparency.
The latter is especially important if you may need to borrow more before maturity. The reason: If you need to renegotiate before your term is up, you don’t want the lender pulling out bad rates because they know you’ll have to take a penalty to get away with it.
And one last point. With inflation risk at an all-time high for several months, don’t be afraid to pay a little more for the extra year or two of interest rate security – assuming you’ve found a flexible lender and need long-term financing.
Maybe it’s the right call, maybe it’s not. But with bond markets pricing in three rate hikes in 12 months, paying 10 or 15 basis points for the privilege of not updating the rate tables at 2 a.m. seems like a bargain.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
Do you want to save on your mortgage?
For the best national mortgage rates for both insured and uninsured mortgages, updated daily, visit our mortgage rates page
Here
.