Tag Archives forHome Loan Rates

Current Interest Rates – Week of 6/25/12

Home loan interest rates, home affordability, and low inventory set the stage for homeowners and home buyers to save thousands. Whether refinancing, moving up, or financing your first home, now is the time to create your real estate strategy and put a plan in place.

What happened with interest rates last week?

The Fed held their quarterly meeting last Tuesday and Wednesday, with stimulus and the possibility of QE3 being announced. The result, extend the current stimulus program “Operation Twist”, allowing the possibility of QE3 in the future. Interest rates took cues from stocks as investors used the announcement as an opportunity to make a quick buck in stocks, causing a brief sell-off in mortgage backed securities, causing home loan rates to increase. Fortunately for interest rates, the stock rally was brief and home loan rates found their way back to levels where they opened the week, poised to make a run at setting/meeting historic lows.


What’s coming up this week on the economic calendar and what’s the impact on interest rates?

Following a week full of anticipated announcements from the Fed, the only scheduled economic reports due this week will be on Friday 6/29 with the release of Core PCE, a popular measure of inflation that excludes food and energy costs. The previous release was at 1.9%, within the Fed’s target range of 1.7-2.0%. While not expected, a release above the target range could cause interest rates to go up. The Chicago PMI, aka “Business Barometer” is also due for release on Friday. Signs of business growth would be good for stocks and bad for rates. Signs of slowing/stagnant business growth would be bad for stocks and good for the safe haven of bonds/interest rates.

The elephant in the room would be the pending release of the Supreme Court’s ruling on the the Affordable Health Care Act. While seemingly unrelated to interest rates or home purchase financing, the ruling will have a great impact on corporations down to small businesses as their plans for growth may be dependent on their required health care plans and/or contributions. With no set date/time for the release of the ruling, it is expected at the end of the week and could be a big factor in market movement once the news hits the wire.


Here’s our strategy for the days and weeks ahead…

Interest rates are trading in a tight range attempting to break out to test the historic lows reached on June 1st. Since mortgage backed securities have never closed above this level, it now acts as a ceiling of resistance that will likely take some sort of catalyst in the market to break through. The good news is, the catalyst could come from any of the following likely sources: further Euro meltdown, Supreme Court ruling on Affordable Healthcare Act, poor economic releases…

The key is to know where you stand with your current home financing in relation to what’s available in today’s low interest rate environment. While rates are likely to remain low, waiting a year to refinance at the same rate available today, would end up costing you thousands of dollars. On a similar note, if you’re buying a home in Dallas, the prices are likely to be higher next year, causing less affordability and the potential of a higher monthly payment than you would have today.

The bottom line is know where you stand in relation to where you would like to be, whether that’s in the same home with a lower payment or in the new home of your dreams. The opportunities available to homeowners are amazing.

We maintain an ongoing dialogue with our clients about the market and interest rates throughout their financing experience so we can take advantage of the lowest rates when they present themselves. We all want the lowest rate, and the best way to ensure that you get the lowest rate, is to build a relationship with your mortgage planner, so they can best advise you on when to lock in your rate. Call us today for a complimentary mortgage review or Apply Online.

Current Interest Rates – Week of 5/29/12

Food for thought…Interest rates were a staggering 1% higher at this time last year. Sure, sounds like a big swing, but what does this mean to someone in the market for a home loan? The current low interest rates allow someone looking in the $225k price range to afford an extra $25,000 in loan amount compared to a year ago. The same loan amount with a point higher rate would be over $133 more per month. While interest rates may not go up immediately, the chart below illustrates how quickly interest rates can move.

Mortgage Backed Securites for 1 year showing change in rates

What happened with interest rates last week?

After reaching all time lows with interest rates on multiple occasions in weeks prior, interest rates were not able to push lower. Instead, we saw mortgage backed securities sell off and have started to make a pretty good case that rates are about as good as they’re going to get for the near term.

The eco-drama continues over in Europe with Spain trying to get a grip on their financials. It’s your choice on who to thank, but Spain, Greece and the rest of the European Union have, without question, helped move our interest rates to where they are and have kept them from going higher. Fear based selling drives money into longer term bonds, helping interest rates.

Markets closed early last Friday and were closed no Monday in observance of Memorial Day.


What’s coming up this week on the economic calendar and what’s the impact on interest rates?

Coming up during this holiday shortened week is the ADP Employment Report on Thursday 5/31 at 7:15 CT and Chicago PMI at 8:45 CT, both of which could cause interest rates to move.

Rounding out the week is one of the more action/news filled days we typically see on the calendar. This will be kicked off on Friday morning, starting at 7:30 CT prior to the market open. The first item worth highlighting is the release of Core PCE, a popular measure of inflation. The Fed likes to see this number within a target range of 2%. Should this figure come in higher than expected, interest rates could suffer due to fear of inflation, the arch nemesis of bonds/rates.

Perhaps the largest report of all is the Jobs Report, estimating non-farm payrolls to be at 155,000. A number reported higher than expected means a potential for rates to suffer as the warm and fuzzies of a growing economy fill the air and investors move their money out of bonds and into stocks.


Here’s our strategy for the days and weeks ahead…

Home mortgage interest rates have gone up over the last few weeks since reaching all time lows. Will interest rates get that low again? It wouldn’t be a surprise if they did, but based on the data and tools that we have on hand, interest rates are more likely to go up over the next year than they are to go lower. Take a look at the chart above and imagine the market moving the other direction, causing rates to increase over 1%. It’s not a matter of if they’ll go up, but when, so talk with your mortgage planner to put a plan in place to take advantage of these rates while they’re still around.

Current Interest Rates – Week of 5/21/12

What happened with interest rates last week?

Interest rates and mortgage backed securities met all time lows last week on 3 separate occasions.  These historic levels have only been reached one other time, back on February 2, 2012, and have been fueled by the fears of a Greek euro exit, deteriorating health of the Spanish banking system, and the stock market’s steep sell-off.  As the lows were reached with interest rates, the markets seem to have once again found this as a ceiling of resistance, meaning some sort of catalyst will likely be needed to break through the ceiling and avoid getting pushed back lower.

Mortgage Backed Securites from week of 5/21/12 and previous 6 months

In the FOMC minutes released last week, several members noted “that additional monetary policy accommodation could be necessary if the economic recovery lost momentum”, however, “one participant noted the potential risks and costs associated with additional balance sheet actions.”  The markets will be on standby to see how this unfolds in coming meetings.


What’s coming up this week on the economic calendar and what’s the impact on interest rates?

There is little news slated to come out this week that would have a major impact on rates.  Investors will be taking cues from the headlines out of Europe and results from Treasury auctions.  Facebook will act as a barometer for the other social media stocks as the Dow, Nasdaq and S&P look to rebound.

New homes sales figures are due on Wednesday at 9 am CT. Initial jobless claims and durable goods will be released on Thursday at 7:30 am. The week will close with Consumer sentiment at 8:55 am on Friday going into the holiday weekend.


Here’s our strategy for the days and weeks ahead…

It’s a great time to be buying or refinancing with interest rates at historic lows.  Looking back at our previous attempt to break through these levels, we saw rates climb one half percent in 45 days, with some stretches moving .25% over a one or two day span.  While we don’t see the catalyst for this to happen on the calendar, any positive news coming out of Europe or our equity markets will give investors a reason to make a quick buck by selling their bonds and buying stocks, causing interest rates to suffer.  If you’re in a short time frame (less than 30 days), be ready to lock at a moment’s notice and make sure that your loan officer or mortgage planner has a strategy in place to lock in your rate as news unfolds.

The stock and bond markets will be closed on Monday for Memorial day.  Next week’s market update will be released on Tuesday, May 29th.

Four Questions to Ask While Shopping for a Mortgage

Are you buying a home and considering shopping for a mortgage or home financing?  Here’s the inside scoop on how to do it right!

First:  make sure you are working with an experienced, professional mortgage planner or senior loan officer.  The largest financial decision of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way.  But how can you tell?



1) What are mortgage interest rates based on?  (The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions.  DO NOT work with a lender who has their eyes on the wrong indicators.)


2) What is the next Economic Report or event that could cause interest rate movement?  (A professional lender will have this at their fingertips.  For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate, call us and we are happy to provide a complimentary in depth market analysis so you can know when is the best time to lock in an interest rate.


3) When Bernanke and the Fed “change rates”, what does this mean… and what impact does this have on mortgage interest rates?  (The answer may surprise you.  When the Fed makes a move, they can change a rate called the “Fed Funds Rate” or “Discount Rate”.  These are both very short- term rates that impact credit cards, Home Equity credit lines, auto loans and the like.  On the day of the Fed move, Mortgage rates most often will actually move in the opposite direction as the Fed change.  This is due to the dynamics within the financial markets in response to inflation.   For more information and explanation, just give us a call).


4) Do you have access to live, real time, mortgage bond quotes?  (If a lender cannot explain how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a costly intra-day price change, you are talking with someone who is still reading yesterday’s newspaper, and probably not a professional with whom to entrust your home mortgage financing.  Would you work with a stockbroker who is only able to grab yesterday’s paper to tell you how a stock traded yesterday, but had no idea what the movement looks like at the present time and what market conditions could cause changes in the near future?  No way!)

Be smart…  Ask questions…  Get answers!

 More than likely, this is one of the largest and most important financial transactions you will ever make.  You might do this only four or five times in your entire life… but we do this every single day.  It’s your home and your future.  It’s our profession and our passion.  We’re ready to work for your best interest.

Once you are satisfied that you are working with a top-quality professional mortgage advisor, here are the rules and secrets you must know to “shop” effectively.

First, IF IT SEEMS TOO GOOD TO BE TRUE, IT PROBABLY IS.  But you didn’t really need us to tell you that, did you?  Mortgage money and interest rates all come from the same places, and if something sounds really unbelievable, better ask a few more questions and find the hook.  Is the rate adjustable?  If the rate seems incredible, are there extra fees?  What is the length of the lock-in?  If fees are discounted, is it built into a higher interest rate?

Second, YOU GET WHAT YOU PAY FOR.  If you are looking for the cheapest deal out there, understand that you are placing a hugely important process into the hands of the lowest bidder.  Best case, expect very little advice, experience and personal service.  Worst case, expect that you may not close at all.  All too often, you don’t know until it’s too late that cheapest isn’t BEST.  But if you want the cheapest quote – head on out to the Internet, and we wish you good luck.  Just remember that if you’ve heard any horror stories from family members, friends or coworkers about missed closing dates, or big surprise changes at the last minute on interest rate or costs…these are often due to working with discount or internet lenders who may have a serious lack of experience and credibility (See our Six Rules of Credibility in a Home Financing Relationship).  Most importantly, remember that the cheapest rate on the wrong strategy can cost you thousands more in the long run.  This is the largest financial transaction most people will make in their lifetime.  That being said – we are not the cheapest.  Of course our rates and costs are very competitive, but we have also invested in the technology, systems and team we need to ensure the top quality experience that you deserve.

Third, MAKE CORRECT COMPARISONS.  When looking at estimates, don’t simply look at the bottom line.  You absolutely must compare lender fees to lender fees, as these are the only ones that the lender controls.  And make sure lender fees are not “hidden” down amongst the title or state fees. A lender is responsible for quoting other fees involved with a mortgage loan, but since they are third party fees – they are often under-quoted up front by a lender to make their bottom line appear lower, since they know that many consumers are not educated to NOT simply look at the bottom line!  APR?  Easily manipulated as well, and not reliable as a tool of comparison.

Fourth, UNDERSTAND THAT INTEREST RATES AND CLOSING COSTS GO HAND IN HAND.  This means that you can have any interest rate that you want – but you may pay more in costs if the rate is lower than the norm.  On the other hand, you can pay discounted fees, reduced fees, or even no fees at all – but understand that this comes at the expense of a higher interest rate.  Either of these balances might be right for you, or perhaps somewhere in between.  It all depends on what your financial goals are.  A professional lender will be able to offer the best advice and options in terms of the balance between interest rate and closing costs that correctly fits your personal goals.

Fifth, UNDERSTAND THAT INTEREST RATES CAN CHANGE DAILY, EVEN HOURLY.  This means that if you are comparing lender rates and fees – this is a moving target on an hourly basis.  For example, if you have two lenders that you just can’t decide between and want a quote from each – you must get this quote at the exact same time on the exact same day with the exact same terms or it will not be an accurate comparison.  You also must know the length of the lock you are looking for, since longer rate locks typically have slightly higher rates.


Again, our advice to you is to be smart.  Ask questions.  Get answers.


As you can imagine, we wouldn’t be encouraging you to shop around if we weren’t pretty confident that we feel that we can give you a great value and serve you the very best.

Please call us with any further questions you may have at this time – we are ready to work for your best interest!