What are you thinking about mortgage rates? Going down or up?

2 Comment(s)

1. Short term government may be intervening to prevent rates from rising, but long term, investors are becoming hesitant to put their money in mortgages where the owner does not have a large piece of equity. This can mean that if you have a large down payment, your interest may hold or even go down slightly, while if your mortgage is a high percentage of value, then we should have a compensating higher interest rate.

   Good credit rating may matter too, but investors are asking home buyers to put up more of the risk money. (down payment)

   donfletcheryh | Jan 31, 2009 | Reply

2. For the next few months, rates are expected to drop back down again due to more poor economic news on the horizon. After last Wednesday’s Fed meeting, in which the Fed voted to cut the Fed Funds Rate by .5%, rates went up.

   Actually to get into more detail, word of this potential rate cut caused rates to go up before the Fed rate cut was even made. Why, do you ask? This is becuase a cut in the Fed Funds Rate generally spurs inflation, and inflation causes mortgage rates to rise.

   When folks caught wind of the .5% projected cut, this caused rates to rise a bit earlier than expected.
   ___

   Now this Friday is the highly important Unemployment/Jobs report, which is expected to be quite worse than expectations. Bad news is usually good news for mortgage bonds, and this news will be no different on Friday. Rates are already dropping on 30-yr fixed rate mortgages as I’m typing this. We are currently 108 basis points up on the day, meaning that the price of the FNMA 6.0% bond is increasing and therefore, rates are getting better or dropping.

   For a 30-yr fixed rate mortgage, current rates are at 6.25% (despite what you read on most mortgage lenders’ websites – they tend to post unattainable rates in the lower 5% range to get more customers to fill out applications.

   Government rates (for FHA or VA Loans) are also currently the same (hovering at 6.25%), but they both could get better as it is currently 3:20pm EST Election Day Nov 4.

   For more information about national rate averages, visit or check out my website at.

   Good luck, and if you are in search of a home loan in the next 30-90 days, a 6% rate is really what you should be looking for. Don’t push to get the 5.75 or 5.5 rate, as you likely will only find that rate to be available once every 8 to 12 months, and that window of opportunity, if it does present itself, usually only lasts anywhere from one hour to 2 or 3 days at the very most. After your loan closes, you can always start the refinance process with the same lender in the future if rates get better 6 to 8 months after your purchase loan closes.

   And remember, on a $200,000 home, the difference between a 30-yr fixed rate at 6.25% and a 30-yr fixed at 6.0% is only about $32/month in savings.

   Matt M | Jan 31, 2009 | Reply

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