Why Do Mortgage Rates Go Up and Down?

During every conversation with a new client, the question always comes up: So what are your interest rates?
Interest Rates Will RiseMy stock answer is usually: “Mortgage rates are subject to change on a daily basis and can change again at any time during the day depending on changes in market conditions. Typically, a borrower’s rate cannot be “locked” until a complete application file has been submitted to a lender for review. Any rate quoted today may or may not be what can be offered at that time.”
Granted, that is a pretty simplistic answer to a very important question. I am prepared to answer it in more detail because it does not really answer the underlying question of: What Are the Market Conditions That Make Mortgage Rates Go Up and Down? 

The Stock Market
This is the easiest benchmark to follow. In general … What’s good for your 401k is not good for mortgage rates.When the stock market indexes go up, mortgage rates typically go up. When themortgage rates2
When the stock market declines, investors are looking for a safer place to put their money. Mortgage Backed Securities are one of these places. When the demand for these bonds goes up, so does the price. When the price of MBS increases, mortgage rates typically go down.
Conversely, when the stock market increases, investors pull their money out of the bond market causing prices to drop. As prices of MBS drop, the market has to pay a higher return to retain investors and mortgage rates will increase.
Economic Data    Mortgage Rates reflect the relative strength or weakness of the overall economy on a daily basis. Rates will go up if the unemployment rate goes down and there is a better than expected economic data. Rates will go down if jobs and manufacturing is stagnant or on the decline; and when housing reports are weaker than expected.
Inflationary Pressure    Low interest rates depend on low inflation. High inflation causes wageseconomy and prices to rise and the cost of borrowing to get more expensive. Good news for the economy is often bad news for Mortgage Interest Rates.
The Federal Reserve    By controlling the flow of cash through the economy, the Fed attempts to keep inflation under control. The Fed’s bond-buying stimulus package added cash into the monetary system in hopes of creating a looser credit environment and an attempt to stimulate the economy with low borrowing costs aka mortgage rates. Their decision to pull money out of the system by pulling back on this package indicates they feel the economy is expanding and they anticipate inflation in the coming months.
Geo-Politics    Investors turn to the U.S. markets when things go wrong in their part of the world. The relative stability of our financial markets provides a “safe haven” for their money in times of global crisis.So when you watch TV and see acts of terror or conflicts in the Ukraine, you might see Mortgage Rates go down. However, if there are reports that China’s economy is improving or Mid-East tensions are easing. Mortgage Rates can be expected to go up.
weatherOther World Events    Let’s talk about the weather! What’s bad for the world is good for mortgage rates. Tsunamis in Japan, earthquakes in South America attract investors to our markets for safety. This flood of money puts upward pressure on bond prices and push mortgage rates down. A serene weather picture around the world could push rates up.

Now I’m just a small broker doing what’s right for my clients. I’m not an economist, nor do I have a crystal ball that enables me to tell anyone where mortgage rates are heading in 2014. But I have been challenged by senior bank executives across this country to look at the big picture when making small decisions that affect peoples’ lives. As my testimonials will confirm, all I can promise is that I will do my best to provide my clients with the Right Mortgage at the Right Rate for thier family situation.

Something Other Things To Consider.
In addition to market conditions, any borrower’s interest rate is determined by many other Get Pre-Approvedfactors including: type of loan, loan program, loan purpose, down payment or equity, and credit score. The interest rate one sees in newspaper articles is available to borrowers seeking a conventional mortgage with a 740+ credit score, have a 20% down payment or equity in their home, probably pay 1 point and is able to pay all closing costs. If a borrower’s real life situation differs from any of these criteria, lenders will perceive this as additional risk in the application and adjust the interest rate accordingly.

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Mortgage Rates Rise On Fed’s Surprising News

Interest Rates Will RiseYesterday was not a good day for mortgage rates with the uneasy news that the Fed seems prepared to raise short-term interest rates sooner than expected. Stocks slipped and mortgage-backed-securities (the market that most directly affect mortgage rates) reacted with negative repricing. The net effect is that buyers hoping for lower borrowing costs can anticipate higher rates in the near term or be looking at higher closing costs (or a lower lender credit toward those costs, if applicable).

4.375% 30 year conventional fixed rate is now being quoted for borrowers with excellent credit scores, +20% equity in their homes; able to pay all closing costs and at least one point. Any variation in these criteria translates into a rate that could be a bit higher.

Get Pre-ApprovedIf your New Year Resolution is to buy a New Home (or Refinance) now is the time to get Pre-Approved and get a jump on the spring buying surge.

Call Me at 860.945.9284 to discuss the right mortgage option for your family and to take advantage of my FREE Mortgage Pre-Approval service. Then call your agent to schedule a showing and be ready to make an offer.

With today’s attractive rates, and my direct relationships with trusted lenders who offer a wide range of affordable mortgage programs, you just might be able to move in to a New Home this Spring.

52 Prospect St, Plymouth CT For Sale – Eligible for 100% USDA Financing

52 Prospect St TerryvilleAttention First Home Buyers! Price Reduced! You can move right in to this spacious,well cared for Ranch/Cape style home this winter.
It’s Eligible for up to 100% USDA Financing. Closing Costs can be included in loan amount. Low rates. Low MI. Beats FHA Any Day.

http://www.realtor.com/realestateandhomes-detail/52-Prospect-St_Plymouth_CT_06786_M30298-34771

Call Rick Cignoli at 860.945.9284 for details on the USDA Guaranteed Rural Housing Development Loan and to take advantage of my FREE Mortgage Pre-Approval service.

Then Call Tim Clark or Bethany Lydem at  Stonecrest Realty 203-592-5201 to schedule a showing and be ready to make an offer

What’s Bad For Your 401k Is Good For Mortgage Rates

mortgage rates2

Fear is Back in the Market! That might be bad for your 401k; but it’s good for Mortgage Rates.
Fear of slow economic growth in China, a gloomy outlook for U.S corporate profits, global unrest, and an end to easy monetary policies caused a 318 point drop in the D.J.I.A. on Friday. Money flew from the stock market to the safety on bonds pushing prices up and yields down. Mortgage rates are at the lowest they’ve been this New Year and close to 2013 lows.
Purchase or Refinance…If either of these are among your New Year Resolutions, Now is the time to explore your options!

77 Grove Street, Thomaston, CT For Sale- Eligible for 100% USDA Financing

 Open House. Sunday, January 19, 2014. 1:00 – 3:00 P.M.

First Home Buyers! Move right in to this 3BR Ranch with LL finished Family Room. Owner Motivated. Will Consider Offers!

77 Grove StreetAnd … It’s Eligible for Up to 100% Financing with a USDA Guaranteed Rural Housing Development Loan. Buyers have ability to roll the Closing Costs into Loan amount. Low Rates! Low Mortgage Insurance! Low Monthly Payments! Beats FHA any day.

http://www.realtor.com/realestateandhomes-detail/77-Grove-St_Thomaston_CT_06787_M33571-38181?ex=CT557408117&source=web

Call Rick Cignoli at 860.945.9284 for details on the USDA Guaranteed Rural Housing Development Loan and to take advantage of my FREE Mortgage Pre-Approval service.

Then Call Margaret at Westview Properties (860)274-7838 to schedule a showing and be ready to make an offer.

52 Prospect St, Terryville CT For Sale – Eligible for 100% USDA Financing

52 Prospect St TerryvilleAttention First Home Buyers. Looking For Space? This Home Has It!
And … It’s Eligible for Up to 100% Financing with a USDA Guaranteed Rural Housing Development Loan.
Buyers have ability to roll the Closing Costs into Loan amount. Low Rates! Low Mortgage Insurance! Low Monthly Payments! Beats FHA any day.

http://www.homes.com/property/52-prospect-st-terryville-ct-06786/id-500013964643/

Call Rick Cignoli at 860.945.9284 for details on the USDA Guaranteed Rural Housing Development Loan and to take advantage of my FREE Mortgage Pre-Approval service.

Then Call Stonecrest Realty 203-592-5201 to schedule a showing and be ready to make an offer

Late Mortgage Payments Compared To Delinquent Credit Cards

Low Monthly PaymentsI’ve been working with a client for almost a year now attempting to refinance their mortgage and save them a considerable amount each month. The challenge has been low credit scores due to delinquent credit card payments.

Recently, the clients called to say they listened to my advice. Their credit cards were all up-to-date. With current low rates and increasing values, it seemed that now was the perfect time to revisit their plans.Mortgage Checklist
They had my checklist of documents we’d need to begin the mortgage process and agreed that the best place to start was with a new credit report.

I was quite surprised to discover that their credit was even worse. The borrower was correct… all his credit cards were up to date. The big problem was they had been paying the mortgage payment 30 days late for the last 4 months. They got caught up on their credit cards by being delinquent on their mortgage payment. Not a good idea!

Now we’ll have to wait another 12 months. Hopefully  all payments will be made on time next year and by then their credit scores will have recovered to a point where it makes sense to refinance.

Remember… pay mortgages first, car payments second, installments debts next and then credit cards. For excellent credit scores ALL payments need to be paid on time.