The Town Broker

REFINANCE NOW!! Why These Mortgage Rates Won’t Last.

World geo-political events have wreaked havoc on wall street in recent days. But what you might have missed is that this has caused mortgage rates to fall to record lows. TODAY would be a good time to call your lender about refinancing!!!

Investor Emotions Push Mortgage Interest Rates Lower

As I’ve said before, mortgage interest rates are NOT set by the government. They are market driven. And financial markets are emotional creatures. Sometimes the markets are driven by predictable events, like the government’s release of existing home sale data or other such numbers. But as mortgage expert Dan Green points out in this post, the market has been hammered with a bunch of unexpected events lately. From volcanic  eruptions in Iceland to tensions between North and South Korea, the world has become a very unpredictable place. Oh yeah…and can anyone say GREECE?!

Hey…I know I said that mortgage interest rates would rise back in April. But these unexpected world events are keeping rates unnaturally low!  Hey… who knew?!

The end result is that the world’s investors are diving for cover, and it translates into lower mortgage rates for you! According to Bankrate.com, rates at the time of this posting were under 4.9%!! (Keep in mind that I’m talking about conforming 30-year fixed mortgages…not some weird specialty product). 

But the chaos won’t last forever. And when it subsides, rates will drift upwards. They always do…

So if you live in and around Westfield and you’re considering refinancing (and hello…it might be a good idea), TODAY would be a great time to call your favorite lender for a quote. If you need a recommendation for someone good, call me and I’ll pass along a few names. I can be reached at 908-216-4836.

Tags: interest rates, mortgage

Mortgage Rates On The Rise

As expected, mortgage rates are on the rise this week. (Hey, I never like to say ” I told you so“, but…umm…) The average rate on a 30-year loan has jumped from about 5 percent to more than 5.3 percent in the past few days. As mortgages get more expensive, more would-be homeowners are priced out of the market. As a result, many homebuyers are now scrambling.

Mortgage Rates Are NOT Set By The Fed

It’s important to understand that contrary to popular belief, mortgage interest rates are not set by the Federal Reserve. When the big kahunas meet in Washington they typically tinker with things like the Federal Funds Rate…the rate that banks charge each other to borrow money overnight. Mortgage rates however, are set by the price of mortgage-backed securities. And recently, the Federal Government…biggest buyer for these products… stopped buying.

That left rates nowhere to go but up.

Mortgage Rates Are Like A Roller Coaster

Dan Green (one of my all time favorite mortgage guys and author of The Daily Mortgage Report has taken the actual rates of the Fannie Mae 5% bond and plotted it as a roller coaster ride. The true-to-life mapping represents the rate changes during the period from 5/08 – 3/10 when the Fed was buying mortgage backed securities, and keeping mortgage rates artificially low.  Come along for the ride, but I’ll warn you…bring your Dramamine!

The Take Away… If you’re in the housing market as a buyer OR a seller, mortgage rates have a huge impact on how things will turn out. If you want to know how today’s rates will impact your ability to buy or sell in this market, give me a call.

Tags: Federal Reserve, interest rates, mortgage

Why Mortgage Rates Will Rise…Soon!

We all know that there is a direct relationship between your mortgage interest rate and how much house you can afford. The cheaper it is to borrow money, the more house you can squeeze into your budget. Ok…Duh! And unless you’ve been living in a cave somewhere, you’ve been bombarded with the news that mortgage interest rates are near their lowest levels in years, and that NOW is the right time to buy or refinance your home.

Well…I don’t have a clue as to whether or not NOW is the right time for you to do anything. But let me tell you why it it’s going to become much more expensive to borrow money…if you wait much longer.

The Fed Has Kept Rates Artificially Low

Since the end of 2008, the Federal Government has been the largest buyer of mortgage backed securities, with $1.25 TRILLION spent to date. This has kept interest rates artificially low (or lower than they would have remained without intervention). On March 31, 2010…a little over 3 weeks from now…this will stop. And rates will start going up.

How much? Hey…If I knew that I’d be sitting on some mountain top somewhere dispensing Read the rest of this entry »

Tags: home affordability, interest rates, mortgage