What’s Your Rate? Home Loan Rates Spike with Stocks at All-time Highs

Home loan rates determine how much you can afford, how much you can qualify for, and much more.  That’s why one of the first questions people ask when they talk to a lender, Bank or mortgage company is ‘What’s your rate?’…and for good reason.

What’s your rate? 

There’s no single answer to the question.  There are many factors that have to be taken into consideration to determine an interest rate. Credit score, Down payment, Loan amount, Loan term, Fixed/adjustable, Market movement etc…

While many of the variables to determine a rate may already be known, the market movement causes interest rates to fluctuate up/down each and every day.

So, what’s YOUR rate?  If you thought you knew, it may have changed more than you think, so here are a few tips when interest rates are moving:

• Has your rate changed?  Ask your lender to provide an updated rate quote based on the current market.
• Where are rates headed and should you lock before they get worse?  Find out the recommendation and opinion on when to lock in your interest rate.  It’s your call but you should be able to rely on the advice and opinion of your lender to make a decision.  If you don’t, find someone who can provide up-to-date interest rate and market information.
• Are you pre-approved?  If so, should you be ‘re-approved’?  When rates are rising, there is no certainty behind how much they can increase and how much your payment can increase.  Could interest rates go up so much that you could no longer qualify for the payment?  Pre-approval and ‘Re-approval’ can help you:
  • Be in a position to make an offer immediately
  • Lock in your interest rate, before they go up, as soon as you find a home
  • Close fast! In a seller’s market – closing fast may be the difference in your offer being accepted

Rates Are Still Low…But Stocks are Forcing Rates Higher

There’s no question that interest rates are still extremely low and not too far away from being at historically low rates.  That is one amazing opportunity that can help people afford more house than they ever have in the past.  But how much do home loan rates have to rise before it starts to impact the house you are trying to buy?The stock market continues to rally and set all-time highs.  I’m happy to hear that and hope people are making some money.  The downside of that is that stocks have climbed to record highs at the expense of home loan rates.  If that person is looking to buy a house or refinance, they may need that extra money to make up for the spike in interest rates over the last week.

Home loan rates have increased in large part due to the rally in the stock market.  Why?  Because lots of the people buying stocks right now had been sitting on the sidelines holding onto their cash, making minimal returns holding things like mortgage backed securities.  Opportunity arises to make more money in the stock market?  Adios!  I’m selling these low rate mortgage backed securities and making money in stocks — the end result is stocks go up and so do home loan rates.

Lowest Jobless Rate in Four Years Drives Rates Higher

Compounding with the rising stock market, and helping fuel it and home loan rates higher for that matter,  was a report of the lowest jobless rate in four years.  Once again, another signal to global markets of a growing economy and job force.

While stocks continue to rally and the economy shows signs of expansion, home loan rates are going to continue to go up and increase the cost for homeowners to buy homes.  But you were prepared for this, right?

If you or someone you know have been in the market to buy a house.  First, make sure they are pre-approved.  Second, encourage them to ask or re-ask the question, ‘What’s your rate?‘ and make sure they are still comfortable with not only their rate, but with their lender as their guide.

If our team can be a resource, always feel free to call and talk to a real person at 972-499-0454.