During the holiday season, interest rates rise by about 0.25 percent across the board, and buying a home this time won't make buyers happy because they're going to pay more for their loan than they would have before December. And here are some reasons why it is called the "Santa Bubble."
Beginning each year that starts around Dec. 5 and ending though mid-January, mortgage rates usually increase because of many bond market transactions such as the increase in consumer confidence, retail sales also increase, and financial professionals are moving money around, plus transactions are being made at a fast phase in the last two weeks of the year.
According to Realtor, there are other scenarios that can influence the annual Santa Bubble during December which include the following: Companies and individuals that had a capital loss may make a year-end money move to reduce their tax liability and it will cause moneys to flow out of the bond market. To drive such activity, monies will move out from selling stock, which means people are moving monies out of individual equities and into the bond market.
Individuals and companies that have had a capital loss may choose to make a year-end money move to reduce their tax liability. Such move can further cause monies to flow out of the bond market. And a rise in bond market yields can generate and support low mortgage rates.
Borrowers who are refinancing their loan this time of year have a little bit of urgency. If a refinance will shorten your term or can lower your interest rate and you can save money, then you have to make a move, as reported by STL Today.
Whether you're buying a home or refinancing your old loan, a good credit score will help you qualify for better interest rates. Check your credit scores for free on Credit.com to see where you stand.