Homes Fort Mill SC

Can 11th Grade Economics 101 predict mortgage rate trends… you bet!

I learned in high school about Supply and Demand.  When Demand is high the price will follow, and likewise when demand is low.  When Supply is high prices drop and right now there is a huge supply of mortgages being written.  When lenders make new mortgages they have to sell more mortgage bonds and right now lenders have an abundance of new loans from January.

What does our high school economics class teach us… if there is a huge supply of these mortgage bonds that need to be sold right now then price must go down.  If mortgage bond prices fall then rates go up.  Right now rates are on the rise and even though “Demand” is gotten them low and will keep them relatively low for a while, “Supply” is pushing them a little higher at the moment. (more…)

If the economy is so bad, why did mortgage rates get higher this week?

We all know that a weak economy typically means lower mortgage rates, but it is not a direct relationship.  Mortgage rates are based on mortgage bonds and any financial instrument trades on both data AND fear.  If you were investing money into a bond that is backed by real estate and that real estate might lose value, you probably aren’t going to pay a premium for that bond. (more…)

Obviously no one knows for sure what affect the stimulus plan will have on each sector of our economy.  The plan is not yet 100% in place and could still be modified or scrapped altogether, although it is unlikely at this point that some form will not be passed soon.  We can look into the general points of the plan and make some educated guesses about its affects and that is what I will attempt to do here.

#1.  Inflation

The bond markets as a whole leaped for joy at the promise of $500 Billion of Fed Reserve money being poured into mortgage backed securities; however when the figure was raised earlier this month the markets pulled back.  One reason is inflation.  Although right now inflation is not a key concern, long term thinkers worry that excessive government spending and debt could weaken the dollar and cause high inflation.  Inflation is BAD for mortgage rates. (more…)

Are you working with a mortgage “broker” or “banker”?

I am not a hater of your common mortgage broker, in fact I think Brokers have delivered fantastic rates and services in the past to certain markets.  Small business makes America great, and mortgage brokers are typically small local businesses.  Mortgage brokers have been writing a majority of the home loans in America for some time, but trouble is on the horizon…

Chase announced this week that Wholesale lending (for brokers) is being shut down.  Retail and correspondent lending is still alive at Chase however, and I think this offers us a unique glimpse into what is coming.  (more…)

Today I was able to quote a couple buying a home in Fort Mill, S.C., at 4.75% for a 30 Year Fixed Rate mortgage.  The home was $400,000 and they put 20% down so the loan was for $320,000.  I charged 1% origination and the APR was 4.8709%.  They had a credit score over 740.

These rates are still awesome, and low rates never last forever.  If you are thinking about buying a home, you should definitely be working towards doing it soon.

One major change over the last week is 15 Year mortgage rates.  (more…)

The Federal Reserve slashed its target rate for overnight interest to a record low 0 to 1/4 percent.  What does this amazing and historical benchmark mean for consumers…

ALMOST NOTHING.

You can get a home equity line cheaper… if you can find a bank to give you one and if you have any equity left.  Your credit cards will probably remain unchanged and this has zero effect on mortgage rates.

The good news is that the Fed is also dumping tons of cash into mortgage bonds and that does have a big effect on mortgage rates.  The mortgage bond market was up considerably today and that means tomorrow morning our rates should improve. 

The Fed Rate cut only serves to remind everyone of what we already know, these are bad times.  Here are a few tips to better navigate these troubled times… (more…)

Mortgage rates hit 4.75% today for a short window for conventional loans over $325,000 and for borrowers with excellent credit.  This is an amazing rate for a 30 year fixed rate loan!  If you are in the market to buy a home and you have been waiting for rates to drop… NOW IS THE TIME!

I have been in this business for over 10 years now, and I have seen low rates before.  (more…)

Mortgages rates for conventional, FHA and VA loans have dropped to near record lows, but might now stay there long!

The federal government has been in the news daily trying to do something to weaken the recession. With the U.S. auto industry on the brink of bankruptcy, home prices still in decline and a seized up credit market, Treasury Secretary, Hank Paulson, has been trying different ideas to jump start the ailing economy. The newest idea is to artificially lower mortgage rates by using the “Bail-Out” money to buy mortgage bonds.

I have written many times about the way mortgage rates work, but here is a crash course for those still unaware… (more…)