Posts Tagged ‘low interest rates’

Mortgage rates all over the place

March 17, 2020

Based on the amount of calls and emails I’ve received, most of you know mortgage rates moved to historic lows in March. Rates also shot up about a full point during the middle of the month only to gain some ground back the following week.

What we are experiencing as a society with Covid-19 is unbelievable. All of us are being impacted in some way. There is enough commentary out there, so this blog will stick with what it tries to do best – impacts on the mortgage industry. Some of us are sick of the roller coaster ride with the markets.

Can we get off of this ride?!?

Again, it’s no secret rates are better. The mortgage industry is at an unprecedented level of refinancing home loans. This heavy loan volume is causing underwriting times to get longer than normal. Although purchase loans are not impacted as they get special access to an underwriter. Why? Purchase loans involve moving trucks and refinances do not. Purchases get priority.

So what is moving the markets? Well, it is a lot of things actually.

  • Covid-19: This is the easiest one to focus on because of the disruption to the economy of the world. Bad economic news is usually good news for mortgage rates. This is no exception. Covid-19 pushed stocks off of their all-time highs, and all of this money flowed into bonds pushing mortgage rates lower.
  • Covid-19 trend before cases in the US: International money flowed into US bonds in late 2019 and early 2020 as from an international stand point, there were fears of an economic slow-down. International investors began buying up our bonds and pushing rates slightly down. So the impact of Covid-19, while dramatic during March, was in play for the past several months.
  • Oil Wars: Saudi Arabia and Russia took off the gloves and went at each other. Russian didn’t want to cut back production to try and stabilize oil prices. Instead, Russia wants oil prices to go lower to hurt the US Shale industry (which needs higher oil prices to remain profitable). Since Russia decided to not play nice, Saudi Arabia is flooding the market with oil to gain back market share. Oil prices plunged. Part of the 2,000 point drop of the Dow on 3/9 was the start of the oil wars within OPEC.
  • The Federal Reserve: During the month of March, the Fed cut the Federal Funds rate to zero. With the Feds dramatically lowering rates, many people thought this would directly translate to mortgage rates. So far, it has not. The Federal Funds Rate lowers second mortgages/home equity lines. Mortgages rates are still determined by bond movement. When the Fed lowered rates the first time, mortgage rates actually increased. The second time mortgage rates improved from the previous week. Not because the Fed lowered rates but due to the Fed’s pledge to purchase bonds (specifically mortgage backed security bonds). Mortgage rates improved some after this announcement.

Where are as of this post? Mortgage rates are still low, but not as low as they have been over the past few weeks. Why?

  • Part of this is bond yields improving from their historic low (making mortgage rates worse).
  • Another part is rates were at historic lows in March; meaning, there is way more room for rates to get worse than better.
  • Lastly, the industry is pretty much at capacity and cannot handle more loan volume; meaning, banks are not being as aggressive with mortgage rates as they have more business than they can handle.

Where do we go from here? Who knows! Expect mortgage rates to stay low during market uncertainty, and the market is anything but “stable” right now! I also expect rates will improve back to where they were before the week of March 9th when rates unexpectedly got much worse. Beyond being back to historic low levels, I am not sure rates would improve much more unless things got exceedingly worse with the economy and/or the capacity issue within the mortgage industry subsides.

I am currently advising my clients if they are happy with the rate and the numbers make sense, let’s get going! It is much easier for mortgage rates to get worse than better given where rates currently sit. If unhappy, I am setting target rates to contact clients if/when rates move lower and it makes more sense to refinance.

Looking to refinance while rates are super low? If the home is in the state of Georgia, contact me today. In a short phone call, we can determine if the numbers make sense to refinance today, and if not, set a target rate for when rates improve.

Interest rates move lower

June 18, 2019

Interest rates/Mortgage rates (same thing) moved to a two year low earlier in the month. While rates have since rose a bit, they are much lower than the start of the year.

Rates are well over a half point better since the start of the year. This decrease is beneficial for two reasons. First, it is helpful for those out looking to buy a home right now. Let’s say someone was looking to get a loan for $250,000. With the improvement in rates, a buyer can now get a loan for $265,000 and have the same payment. More buying power!

The other is for existing home owners. The Chief Economist at Freddie Mac said with rates dipping below 4%, “there are over $2 trillion of outstanding residential loans eligible to be refinanced – meaning the majority of what was originated in 2018 is now eligible”

So… should I refinance? A couple of questions you can ask yourself:

  1. Did I purchase a home in 2018? If yes, then rates are definitely lower than when you bought. It would be worth looking into what a new payment could be with a lower rate.
  2. Are current 30 year fixed rates of at/below 4% better than a half a point or more than your current rate? If yes, then it is worth looking at the numbers.
  3. Considering taking some equity out for a home project? I am working with several clients doing a cash out refinance. With the drop in rates, these clients are getting a lower rate, cash out for home maintenance, and keeping a similar payment to what they are making now.

Do you fit into any of those questions? If yes, it might be time to review the numbers for a potential refinance. If you are a homeowner in the state of Georgia, contact me today! In a short phone call, we can decide if the time is right for a refinance. If rates aren’t low enough for it to make sense, we can set a target rate and I’ll contact you when rates move lower. It is that easy. If nothing else, it is worth inquiring to make sure you don’t miss out on this drop in mortgage rates!

Lock and shop with rate float down

April 25, 2017

Last time we discussed the competitive market for home buyers. I suggested getting underwritten prior to making an offer on a home. That way the offer can say the buyer is “approved” and can close in about two weeks (only need the appraisal!). When I talk about this option with clients, they also ask about whether they can lock the interest rate. Most lenders/banks prefer a buyer be under contract to purchase a home, but that isn’t the case with Lock and Shop.

Buyers can lock in their interest rate today without a purchase contract, and then go out looking for a home. The program typically works like this:

  • We start the loan process as if we have a contract to purchase a home.
  • We submit the loan to underwriting for approval, and can lock the borrower into a 60 day rate lock.
  • This provides plenty of time to find a home, get under contract, and complete the closing

This is a great program for buyers. They can go ahead and get underwritten for a home purchase. They can also lock in a rate now, and not feel so pressured to find a home before rates could possibly get worse. With a 60 day lock, there really isn’t a rush on either side of the equation (finding a house and then getting loan approval). 60 days is more than enough time for both!

On top of that, there is a one-time FREE float down on the rate lock. The window to use the float down is within 30 days of closing (or rate expiration) and 8 days prior to closing (or rate expiration). If interest rates have improved by 0.250% or more, the rate can be lowered to the current market. That’s it. No fees and no tricks. There is a roughly 3-week window to use the float down, and rates must be improved by 0.250% or more.

If you’d like to learn more about the lock and shop program for a home purchase in Georgia, you know where to find me!

MMMM….Mortgage Cake

June 5, 2014

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When you are looking to buy a home, one primary consideration is, “What interest rate will I pay for my mortgage?”  I’ll borrow the saying “have your cake and eat it too” in order to explain.

Truth is mortgage interest rates fluctuate daily, and can change multiple times in a single day.  So when do you lock the rate? Now you’re faced with a dilemma and must ask yourself:

  • “If I don’t lock and rates go up, my monthly payment will be higher.”
  • “If I lock today and rates go down, I will miss the chance to have a lower monthly payment.”

This is one case in life – when working with the right lender – you can actually have your cake and eat it too!  Get out your fork and napkin while I explain.

The base layer of your cake is a quick description of a rate lock.  You lock the interest rate for the period of time you need to close on your home.  Options include 15, 30, 45 days, etc.

The next layer of your rate lock cake is the fact that when you lock, your interest rate will not increase even if market rates rise significantly before you close.  You are locked in and won’t pay more as long as you close within your lock window.  You’ve just addressed the first horn of your dilemma.

Now the sweet icing on your rate lock cake…some lenders, like the ones we at Dunwoody Mortgage represent, offer interest rate “float down” options.  If rates improve before you close, you can have the opportunity to “float down” to a lower mortgage interest rate at no cost to you – dilemma solved!!

Financing your new home purchase with Dunwoody Mortgage can protect you against rate increases and decreases. Your dilemma is solved as you don’t have to worry about when to lock OR what if rates improve!  If you are looking to buy a home in the state of Georgia, and want this kind of interest rate security, then give me a call.  I would love you help you have your cake and eat it too.

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“Should I buy?”

October 11, 2011

I get that question a lot these days. “Should I buy a home?” It is a valid question to ask. Some may be concerned about the stability of their jobs. Others may be concerned about whether or not we’ve hit “the bottom” in regards to housing prices. I do understand the reasoning behind those concerns, but let’s look at it from another angle.

The chart above shows the correlation between purchasing power and home values. Currently, we are siting in one of the best periods for buying a home – low interest rates (purchasing power) with lower home values. This combination is very tempting, but still some are holding back. Why? It seems people feel rates are going to stay low forever. That isn’t the case. Interest rates are like stocks… sometimes they go up/down in price for unexpected reasons. For instance…

This time last year, interest rates were at the same point they are now. In the high 3’s. Then around the start of November, interest rates began to climb. Before the end of December (about a 6 week period), interest rates went from the high 3’s to the mid 5’s. It was an unexpected jump and put some people’s home buying/refinancing plans on hold.

What kind of a difference does that jump in rates make? If you qualified for a principal and interest payment of $1,000 each month, then you’d be able to purchase a home up to $250,000 with a 20% down payment while rates remain at their current levels. With rates in the mid 5’s, that same monthly payment of up to $1,000 would cause the purchase price to decrease to $220,000. That is a loss of $30,000 of purchasing power.

In short, the question you should be asking yourself is not “should I buy?,” but “what am I waiting on?” If you plan to remain in the area you are currently residing for the next few years, this is one of the best times ever to buy a home due to the combination of low rates and lower home values. If you are looking to purchase a home in the state of Georgia, I’d be glad to help you get started!