Hey Cora: I am confused about interest rates. I mean, I heard that rates dropped down to like 1.5% but when I called lock my rate to purchase a house, they were much higher – what’s with that. Totally confused. Hey Cora: I am confused about interest rates. I mean, I heard that rates dropped down to like 1.5% but when I called lock my rate to purchase a house, they were much higher – what’s with that.
Dear Confused, it’s understandable, I have got a lot of calls this week regarding those rates. But Mortgage rates are based on the Bond Market. Because mortgages are long- term loans, their interests rates tend to track long-term bond yields rather than short-term interest rates such as the federal funds
rate. Now that doesn’t sound incredibly interesting, does it? But these fell too, as investors fled from these government bonds, which are usually seen as “safe”.
Real estate experts say: “With the Fed cutting rates to 0% and re-starting quantitative easing, including purchase mortgage-backed securities, mortgage rates are poised to drop back down and may even hit a new record lows.” Says Danielle Hale, chief economist at Realtor.com. So economist have their own way
of speaking – the speak is awkward and clunky to us normal people, so I will translate for you because a speak a “little” economist, but I am not fluent so excuse my sentence structure: Just because the feds
drop the rate to zero doesn’t mean that mortgage rates will be that low. Because really, who is going to loan money for mortgages if the rate is zero? If you had a pile of money in your mattress, and someone with an “acceptable” credit rating asked to borrow it for 30 years, oh, and please don’t charge me anything for doing it – would you loan it to them? I didn’t think you would. So, rates must be at a reasonable rate OR no one is going t o be able to get a mortgage because banks can’t lend at that rate and keep their investors happy. The fed doesn’t want that to happen.
So right now, rates are all over the place – if you currently are under contract to purchase a home, you will want to speak with your loan specialist and see about locking that in. I spoke with a realtor 2 days ago, said he locked in a client at 2.75%. Today, a friend was in my office said rates jumped to 4%.
Basically, you need to contact your loan officer to find out what it’s doing today.
Another thing to consider might be to refinance. With a VA loan, you can refinance without an appraisal or other costs. It’s very simple, and the whole pre-qualifying thing is just not there. If your current rate is said 4.5% and mortgage rates drop to 3.5%, it’s worth it to refinance. Depending on the mortgage
amount, this could be significant.
My best advice, rates are going to swing all over the place thru April. If you are in the process of getting a loan, have your loan officer on speed dial! Sometimes rates change several times per day! Mortgage
rates popped up in January and dropped to an all-time low in March – what will April bring? Flowers!
Yup mostly flowers – Now if you are talking mortgage rates, I could take a guess with my Magic 8 ball, but in all honesty, I will settle back down again once the virus has “run it’s course” so to speak. I would say we are looking at 3.7% to 4% for the month of April. This is stability, just what we want.
General Market Notes:
A) If you are buying a home and working with a lender now – keep in touch with them and consult them about when to lock your rate.
B) If you are thinking about selling, inventory is very low and there are people buying. I sold 6 homes this month already! Seriously
C) If you are thinking about buying, get prequalified so we can watch that rate together, then let’s get out there and find something asap.
D) If you are locked in your home with your family – I am sorry, let me know if you need me to bring you something!
Let me know if I can answers any questions, and please email me if you have a real estate questions, I love all your good questions. There’s a coffee card in it for you if I use your question! Call me!