In the last week or so, mortgage rates have increased by 1/8 to 1/4 of a percent. Why? In the most simple terms, because recent economic data indicates sufficient economic strength that the Federal Reserve is unlikely to lower the Fed Funds rate any time soon. For more detail, let us turn to Morgan Stanley :

Treasuries posted big losses over the past holiday-shortened week.  The market moved close to pricing out the possibility of any Fed easing on any timeframe in response to incoming data that continued to point to a big pickup in growth in the second quarter, after the weak first quarter showing that increasingly looks to have marked the trough of the mid-cycle slowdown.   Stocks moving to record highs certainly didn’t help either…In the shorter term, the fed funds futures market now sees almost no chance of a rate cut before year-end.   Three months ago at least two cuts were priced in.  

In other words, the market's belief is that we will need to see worse economic data than we are now seeing for the Fed to reduce rates. While this is not good news for the housing market, we don't believe this will impact Maui in a major way. Rates, even at today's levels of around 6.5%, remain very attractive. For more information, contact us!