Blog Category: interest rates

historical rate chart

220 Year History of Interest Rates

A while back, I published a chart of interest rates that went back about 40 years. I did this in an attempt to show that the recent increase in interest rates, as well as future interest rate increases, is not a major event when put into historical context. Interest rate history is almost as important as current interest rates.

I want to put this into a larger perspective. How about looking at a 220-year history of interest rates? Read More

bad versus good

6 Tips on Choosing a Mortgage Lender or Broker

Is choosing a mortgage lender important? People spend a  lot of time looking for the perfect home. There are the countless hours spent poring over real estate listings, the weekend trips to open houses, and the days of driving with your realtor from showing to showing. However, choosing a mortgage lender or broker is often treated as an afterthought. Many buyers simply go with their own bank or a broker/lender recommended by their realtor. They do so without researching competitive rates and looking for lenders who will also educate them.

This is a critical mistake. Read More

Percent Character rates

96.5% FHA Loans vs. 95% Conventional Loans

FHA Loans vs Conventional loans is an important discussion. Since you can no longer drop the MIP on an FHA loan, I wanted to show a comparison between a 3.5% down payment FHA loan and a 5% down payment Conventional loan. I think it may encourage some buyers to save up a bit more to get 5% down for a Conventional loan. Read More

numbers

Add-ons? What are those?

Mortgage Add-ons? What are those? Most people are not aware that Fannie Mae and Freddie Mac have a whole chart of pricing “add-ons”. Add-ons are an amount usually expressed in discount points. These points are added on to the “base rate” in certain situations. Each 1.00 point is 1.00% of the loan amount. Another example is that a .25 point is a .25% of the loan amount. On a $400,000 loan a .25% point is $1,000.

Some examples of situations when mortgage add-ons are required: Read More

Percent Character rates

APR (Annual Percentage Rate) Is A Poor Judge Of Character

APR (Annual Percentage Rate) is a poor judge of character. Annual Percentage Rate, or APR, is a legal requirement that mortgage lenders must disclose on one of their disclosures called a “Truth In Lending” statement. It is not a useful way for the consumer to measure the cost of a mortgage.

It is supposed to be a way for lenders to express their closing costs in terms of a percentage. The thinking is that consumers can simply ask lenders for the APR, and can quickly shop mortgage loan offers by analyzing this one number. But things are not that simple.

APR makes no intuitive sense to most consumers, it does not cover all the costs, and does not take into account differences in a consumers’ time horizons, tax rates and opportunity costs. A more accurate way to measure the cost of a loan is to simply take a more involved look at the interest rate and the closing costs from the lender only. To compare loan offerings between lenders the consumer need not look at title costs, per diem interest, tax escrows or state/county recording and transfer taxes. None of these aforementioned costs is dictated by the lender or is part of the loan itself.

Let’s take an example on a mortgage loan for a property in Washington, DC. Read More

Big Bank Skyscraper

Are Banks Too Big To Fail? Or Simply Too Big To Work With?

There are some banks deemed too big to fail. Those are the ones that have been the recipient of much taxpayer benevolence. Whether you agree with that or not my contention is that big banks and most big institutions are simply too big to work with. Most large entities do not work well. Once you scale something up to a certain size it seems impossible to make it function well. Read More

ten percent off sale

Are Housing Values Dropping Now?

Are housing values dropping now? Potential homebuyers who contact me for a mortgage are now frequently asking if they should wait to buy a home.  The implication is that people are now worried that housing values are going to fall. So why buy now? Isn’t it smarter to wait? Maybe, maybe not. It is understandable why everybody is asking the question, “are housing values dropping now?” Read More

rising prices

Are Interest Rates Too High?

Interest rates are becoming a hot topic lately. With interest rates shooting up approximately 1% in about a month, there is plenty to talk about. It seems that some people were only in the housing market as a result of give away mortgage rates. When I hear someone exclaim surprise when I quote a 4.5% interest rate, because they heard rates were at 3.5% six months ago, it actually shocks me that people are surprised.

Read More

Percent Character rates

Average Interest Rate

I get a lot of excited questions based on information people see on the latest average interest rate news. This data is usually published monthly by the media, so it is a regular source of misleading data.

It is a compilation of a lot of different interest rate quotes and variables, that do not apply to everyone’s exact situation. Also, it is a national average figure, with interest rate quotes from across the country that may not apply locally, and many times also includes interest rate quotes with points. But most consumers do loans with 0 points. Hence, the numbers you see on TV or in the newspaper always looks artificially low. Read More

safe vault

Banks Treat Me Special….You Know…Because I Have A Checking Account There

Big banks can be slow. They may use appraisers that do not know the local marketplace. They do not communicate like a local lender does. And they may be slow to return calls and emails. Below is a note from a client who I followed up with after they chose to use a bank they banked with instead of working with me. They chose the bank because they banked there they thought they’d get special treatment.

Read More

bank vault steel door

Big Banks Are Big Time Inefficient?

Big Banks Are Big Time Inefficient? Big banks, you have to love them. I am not sure I could pull off accepting federal bailouts, pointing the finger at others for a mess I helped to create, then giving out big bonuses to some employees. All combined with poor service at times. Read More

interest rates

Bond Market Report – April 2019

 

The 10 Year Treasury Bond is at 2.56% as of last Friday. This is about the same as the last time I posted 10 Year Treasury Bond data in early January.

On 01-03-2019 the 10 Year Treasury Bond was 2.55%.

The 10 Year Treasury Bond is not a direct correlation to mortgage rates. It is simply a good to know historical information on treasury bond rates.

Below are some interesting historical numbers*:

In 2018 the average yield of the 10 Year Treasury Bond was 2.91%.

In 2017 the average yield of the 10 Year Treasury Bond was 2.33%.

In 2007 the average yield of the 10 Year Treasury Bond was 4.63%.

In 1997 the average yield of the 10 Year Treasury Bond was 6.35%.

In 1987 the average yield of the 10 Year Treasury Bond was 7.18%.

In 1977 the average yield of the 10 Year Treasury Bond was 7.42%.

Where is the 10 Year Treasury Bond headed next? 

*The source for these numbers comes from: https://www.macrotrends.net/2016/10-year-treasury-bond-rate-yield-chart

interest rates

Bond Market Report – January 2019

I am going to post numbers on the 10 Year Treasury Bond on a regular basis. The 10 Year Treasury Bond is not a direct correlation to mortgage rates, but it is a good number to know.

As of 01-03-2019 the 10 Year Treasury Bond was 2.55%.

Below are some interesting numbers*:

In 2018 the average yield of the 10 Year Treasury Bond was 2.91%.

In 2017 the average yield of the 10 Year Treasury Bond was 2.33%. Read More

cocktail party

Cocktail Party Chatter

There is nothing worse for a mortgage lender than the current cocktail party chatter going on about interest rates. It seems to be a main topic at the water cooler, over coffee, on Facebook, and at cocktail parties. Who got what rate? Who got the lowest rate?Rates, rates, rates. No talk about service or experience, and no talk about execution. It reminds me of the talks I hear about related to who has what car or what house, who took what vacation, etc. Interest rates are the current cocktail party chatter, and it is not good for me. Why? Read More

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Corn, Salt, Wheat and Mortgages?

Let’s do a quick lesson that may take us back to our school days. I want to make sure everyone knows what a commodity is and is not.

What is a commodity?

A commodity is a good for which there is demand, but which is supplied without qualitative differentiation across a market. The market treats a commodity as equivalent or nearly so no matter who produces it. Examples are corn, salt, wheat, petroleum and copper. Read More

credit cards

Credit Score Simulator

A Credit Score Simulator can help with “What If” scenarios to determine what you could potentially do to raise your credit score. It can also show you what could negatively impact your credit score. It is important to see how your credit choices might affect your credit score because your credit score will impact the underwriting of your loan, your interest rate quote, and even the cost of your mortgage insurance.

Some of the various things a Credit Score Simulator can measure to see how they will impact your credit score are: Read More

Refinance

Current Mortgage Rates

I am sure many people want to know where current mortgage rates are at all times, but especially after the recent stock market debacle where the DOW was down almost 1,000 points at one point in the day. Of course, the story line we are hearing is that the mistaken input of a fat fingered trader at Citi is solely responsible for the error. That story is meant for an entire other blog post, but if anyone believes there are not checks and balances in place to protect from those sorts of simple mistakes, then I have a bridge for sale. Read More

interest rates are up

Current mortgage rates

Everybody is asking about current mortgage rates these days. And everyone knows they are higher! But are they high? And what exactly are they? How are they determined? Let’s take these questions one by one.

Are mortgage rates high?

Looking at the historical numbers, today’s rates are average. You might possibly consider today’s rates a little above average. I wrote this blog with charts that show historical rates. This is a good reference point. You will see that mortgage rates don’t routinely get as low as 3% or 4% over history. Even 5% is rare. If anyone is waiting for rates to go as low as they were in 2020 and 2021, they’ll likely be waiting a long time.

You can click here to watch this video for a short review of my take on historical rates.

What exactly are mortgage rates now?

Mortgage rates can’t be quoted in generic terms. If you want to get a quote that is anywhere near accurate, you need to discuss details with a mortgage lender.

Mortgage rates change due to a few variables. Some of those variables are:

  • Credit score: Obviously a higher credit score is better to get more competitive rates.
  • Down payment: Surprisingly a larger down payment does not necessarily guarantee better terms. A 5% down payment loan typically has mortgage insurance. That mortgage insurance may cover the lender up to 30% of the value of the home. Between 5% down payment and 30% PMI coverage that is 35% of safety for the lender. And that 35% of protection is more valuable than a 20% down payment. This means that a 5% down payment loan may have slightly better terms than 20% down. But there are scenarios where higher down payments may provide better terms. This is why you need to talk to a mortgage lender in detail.
  • Loan Size: Mortgage rates will vary based on loan size. You need to talk to a mortgage lender to see if your loan amount is Conforming, Conforming “High Balance”, or Jumbo. Read more about loan size.
  • Debt ratios: There are times when higher debt ratios may impact your mortgage terms.
  • Property type: Certain property types can come with higher mortgage rates. Condominiums, 2-4 unit multi-family properties, and other property types can come with higher terms.
  • Mortgage type: Rates will vary depending on if you are considering a fixed rate, a buydown mortgage, or adjustable rate mortgage.

A mortgage borrower will pay a much higher rate who wants to buy a condo with 5% down, who has a lower credit score, for a condo. And a mortgage borrower will get lower terms who wants to buy a single family home, with 20% down, and a high credit score.

How are rates determined?

The Federal Reserve determines mortgage rates, correct? No. The Federal Reserve is one lever of many that may have an impact. Mortgage rates are more affected by the free market. Keep an eye on inflation, economic news, and the general economy. This blog I wrote discusses the Federal Reserve and the economy in more detail.

It is also important to note that mortgage rates can change each business day. Rates move up and down daily, just as frequently as you see daily stock market moves.

What are current mortgage rates? As you can see that is a complicated question. You can fill out this form to see terms for your scenario. There is no fee required, no credit pull needed, and no obligation. After seeing numbers you can decide if it is time to get pre-approved.

Conclusion

Contact me to discuss your scenario, your local housing market, or other questions. Click here to schedule a call or you can email me directly.

Refinance

Daily Interest Charges

Daily interest charges on a mortgage are confusing. I have heard hundreds of times that people think they should settle at the end of the month to save money on the closing costs. They make it sound like you will save enormous amounts of money by closing at the end of the month. Everyone knows its true. I have clients whose friends tell them this, their neighbors and workmates also tell them. So it must be true, yes? It is not true. This is an old mortgage myth. What these people are talking about is the daily interest charge, also known as per diem interest.

Read More

interest rates are up

Did The Coronavirus Make Mortgage Rates Go Down? Did the Federal Reserve Just Cut Mortgage Rates To 0%?

Mortgage rates did indeed go down after the Coronavirus spread and financial markets started to panic. But the Coronavirus and mortgage rates aren’t directly connected.

People considering a refinance continue to contact me for low rates, but now that rates have spiked it may no longer makes sense.

The recent mortgage rate reductions we saw may be gone for a period of time, but the rate changes are not as drastic as the media made it sound. Read More

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Do Not Be Sold, Be Educated

One motto I follow in life is: do not be sold, be educated. One of the favorite t-shirts that I have is an old, tattered blue t-shirt that has the words “I Need Advertising To Help Me Decide” written across the front. I love the sarcasm and the not so subtle message. It is discomforting that so many people let themselves get sold, as opposed to taking the time to learn, study, analyze and decide using proper business analytics. I see this in the mortgage world more than you would think. Read More

Federal Reserve Has No Control

The Federal Reserve has no control? When it comes to interest rates, the Federal Reserve is fairly irrelevant. All it does is adjust its rates to those set by the market. If you plot the yield on T-bills against the discount rate, you will see that the former leads the latter. Despite all the rhetoric about it, the Fed has not kept rates artificially low, just as it did not make them soar in the 1970s. The market sets the rates, and the Fed follows. Read More

Refinance

FHLMC Is Offering Mortgages Direct!

Why do I feel like when someone calls me to talk about interest rates, they are calling multiple people, scouring the internet, and getting a lot of misinformation? I have a good friend who works at Freddie Mac (FHLMC) who I met for dinner recently. Over dinner conversation she mentioned that when FHLMC sends out their report on average interest rates. They get calls daily from homebuyers and people interested in refinancing. These people ask how to apply with FHLMC for that rate! My friend says the callers will say, “Can I get that rate from you that you guys reported, I can’t find it anywhere else!” They then have to explain that FHLMC is not a lender. FHLMC is a corporation authorized by Congress to provide a secondary market for residential mortgages. Read More

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Get A 15 Year Mortgage Instead Of A 30 Year?

Many people ask about 15 year mortgages. Some people ask about a 15 year mortgage in relation to refinancing. They figure with lower rates maybe they can afford a 15 year loan instead of a 30 year loan. And some people inquire about a 15 year loan when buying a home, because they want to pay off debt faster. But the monthly payments are quite a bit higher on a 15 year loan. Although you can save a lot of money over the long haul, you really have to decide what you can afford, and if cash flow is more important than building equity.

Read More

wallet

Get The Lender To Pay Your PMI?

When someone says the words: mortgage insurance, most people have a negative reaction because they think paying mortgage insurance is a waste of money. Most people, of course, always think they are qualified well enough and should not have to pay PMI (Private Mortgage Insurance). But most people don’t realize the low down payment loan they need would not even exist without PMI. So maybe its not as evil as first imagined. Another thing that people do not realize is that there is an option to get the lender to pay for the PMI. It is called LPMI, which stands for Lender Paid Mortgage Insurance.

Read More

online shopping

Getting A Good Rate: Priceless. Rate Shopping Online: Useless!

Everyone wants to get the best deal reasonably possible when getting a mortgage. I say reasonable, because although some lending sources advertise what seem like unreal rates, most consumers are smart enough to discount what appears to be a free lunch. The reality is that even with hundreds of competitors, rates never vary by much more than 1/8% in rate. But hey, who does not want every 1/8% to be in their favor?! I do. So go for it. But here is the problem with shopping for that best 1/8% deal online: Read More

Court Jester Clown

Getting A Mortgage Is Easy, I Can Use Anyone…Right?

Getting a mortgage is easy, right? You apply for the loan, you send in some paperwork, someone appraises the home, if your credit is OK, a little bit later you get a mortgage. Right? It should be that easy, I agree. We have the technology and desire in place to make the mortgage process easy, I believe. But getting a mortgage has become the most arcane, complicated, minutia filled experience ever. It is worse than going to the Department of Motor Vehicles, by far. Read More

GMAC Sells Cars But Not Loans?

I have decided not to lock-in any loans with GMAC/Ally Financial, until I see a resolution for their current problems. Ally Financial, the former GMAC, still owes taxpayers a lot of money from the bailout we gave them! This was part of the General Motors and Chrysler bailouts, and included their financing divisions, one of which is the mortgage lending division of GM. Read More

Refinance

Good News For Stocks Is Bad News For Bonds/Rates

It looks like rates are edging up today, again. Here is this morning’s bond market update from MBS Online:

“MBS are down -13/32 (FNMA 30-yr 3.0 at 103.23), around 16/32 lower than yesterday at this time. Unfavorable repricing took place yesterday. Early investors may have priced at levels as high as -10/32.

Global investors have continued to shift to riskier assets today, pushing major US stock indexes to multi-year highs, and hurting bonds. Stronger than expected economic news from Europe was the main influence today. MBS prices have dropped to levels last seen in September. The Dow is up 50 points. New Home Sales will be released at 10:00 ET.” Read More

house and house key

Help Entering The Home Buying Market

Many homebuyers need help entering the home buying market. They cite obstacles and problems that create fear in moving forward with buying a home. This is especially true of first time homebuyers. But with some research and patience, there are answers for a lot of these questions. And there are many ways to overcome fears of home buying.

See the list below of some of the most common fears, and answers to those fears. Read More

online search

How To Find The Best Mortgage Lender

When comparing mortgage lenders there are many things to consider. If you want to save time follow the below steps on how to compare mortgage lenders. Time is valuable and these six steps should help you find a good mortgage lender: Read More

special sale only this week

How to Get the Lowest Mortgage Rate

Clients always ask me how to get the lowest mortgage rate. Especially given the fact that interest rates have increased since 2022 after having been at record lows for so many years prior to that. Many people think mortgage rates are high currently. However, interest rates today are historically quite average. We were just spoiled with cheap money for a very long time from just after the economic debacle of 2008 through most of 2021. What I see now is an almost carnival like atmosphere of people hawking quick fixes to get “special” mortgage deals. Read More

interest rates going up

Interest Only Loans

Anyone that reads my blog knows that in general I am not a fan of Interest Only (IO) loans. I have said before that an IO loan is like putting your mortgage on a credit card. But on a refinance it may make sense for a few reasons. If you have already built a lot of equity it may make sense. And if you are more interested in savings than equity building. And if you know you are not going to live in the property forever so have no interest in getting the mortgage paid off.

Read More

balloons floating through the air

Interest Rate “Float Down”

What is an Interest Rate “Float Down”? It used to be that if you locked in an interest rate, you’d have a chance at a lower rate later in the transaction and prior to closing via a “float down”. A float down may, for example, allow you to initially lock-in a 6% 30 Year Fixed rate with 0 points, only to float down to a 5.5% 30 Year Fixed rate with 0 points later in the transaction if rates fall during the processing of the loan.

Read More

Percent Character rates

Interest Rates And Your Monthly Mortgage Payment

Many people are very focused on interest rates these days and are wondering where they are headed next and how it may affect their mortgage payment. Interest rates have been historically low for a very long time. And people are starting to fear that they may increase and have an outsized impact on the cost of purchasing a home.

You can see a chart of the long-term history of interest-rates by clicking here.  This chart shows that we are definitely near the bottom of where interest-rates have been over a long period of time. On the other hand, if interest-rates start to go up does it have as much of an impact as people think? Read More

down arrow

Interest Rates Are Down!

Interest rates are down, do you need to refinance? Are you looking to buy a new home?

I have noticed in the past that when rates go down, they do not seem to stay down for very long. It seems they stay down for days, maybe weeks. Right now you can get a 30 year fixed-rate mortgage for somewhere around 4.75%, and you can get a 15 year fixed-rate mortgage for somewhere around 4.25%. The specifics will depend on the loan size, your credit score, the property type, property location, etc. Read More

Percent Character rates

Interest Rates Are Going Down, Except They Are Not

A common refrain I hear from mortgage borrowers is that interest rates are going down when they are not. I had a client insist recently that he knew rates were going down. He expected a better interest rate than what he was already locked into. But I saw that rates were exactly the same as when we had first started his transaction. After researching this some more I found that Read More

interest rates

Interest Rates Are Still Low. Or Did They Go Up? Are They Down?

Interest rates rose after the presidential election. The news from the bond market according to MBS Online was “Trump has advocated for greater spending on defense and infrastructure. And at the same time he proposes to cut taxes. These policies raise the prospects for increased deficits and inflation. Neither of which are good for mortgage rates.”1 Read More

rising prices

Interest Rates Can Go Up Too

There is always another bus, right? So why not wait for the next one? I am not sure I agree. The next bus may be broken down, or out of gas, or delayed beyond a comfortable waiting period. But I am not talking about a bus, I am talking about a refinance. I hear rates are going down 1% a week, and soon banks will be giving away money for free. Do not refinance now because mortgages will be free soon if you wait. And if you wait long enough, banks will even pay you to take a mortgage. Is this true? Come on! You know my sense of sarcasm. No, it is not true. But Read More

interest rates going up

Interest Rates Going Up by Rules, Not by Market

There are increases coming to mortgage interest rates due to several rule changes. One change is a proposed increase in the guarantee fees. This is also called the g-fees. This fee will increase 10 basis points, which is equal to 1/10th%. There are also increases coming to what I call add-ons. Add-ons are fees charged by Fannie Mae and Freddie Mac. Add-ons vary depending on credit score and down payment of each mortgage borrower. Read More

Refinance

Interest Rates Up Again… a Lot!

Interest rates are now up about 1% from their rock bottom lows of a few months ago. The inevitable interest rate increase from all-time lows is continuing. Investors have continued to sell stocks and bonds following the Federal Reserve meeting last week. It seems that if the economy performs as expected, then the Fed plans to taper its bond purchases later this year. Over the past few years, the Federal Reserve bond purchase program has helped mortgage rates decline to historically low levels. This occurrence has lifted the stock market. So any sign of the withdrawal of stimulus has hurt both stocks and bonds. Read More

Percent Character rates

Interest Rates, 3% or 15%?

Everybody likes to offer an opinion on where the stock market is headed next, or where interest rates are headed, among many other things. So I’ll jump into the fray and offer my opinion as well. I think Read More

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Is My Loan Approved Yet?!

Is My Loan Approved Yet?! I hear a lot of people who apply for a mortgage complain about the inability to get a simple, timely status on their loan application. Some people don’t even get a weekly call. I think people should be able to know what is going on with their loan application whenever they want. So I created a way to do this that is easy for all. Read More

big bubble

Is Real Estate in Another Bubble?

I wrote an article in February 2013 discussing the low inventory environment. I was wondering where the sellers were and predicting that inventory would eventually start to rise, which would put a lid or even some downward pressure on real estate prices. To read that article click here. So where are prices and inventory headed now, a few quarters later? Read More

dark

It Got Dark!

Going dark on your salesperson. All salespeople have experienced this, no matter how good. You educate a potential client, you spend hours and hours with them answering questions, you create a relationship, and you truly seek to help them to earn your commission. And then it happens, they go dark. No contact. No return calls. No email reply. No nothing. It is eerie. You start to wonder what you did wrong. Read More

confused

It Is Easy To Be Confused

It is easy to be confused when shopping for a mortgage these days, especially a refinance. Most lenders just throw up as much stuff on the wall as they can to see what sticks. They would take 1000 loan applications in the hopes of closing on 500 of them. But where does that leave the 500 people that had their loans rejected? Is it fair to have them pay $400-$500 in application fees, and to wait 30-90 days, when it could have been determined in advance the loan was not able to be approved. Read More

House For Sale

It Was Confirmation Bias That Overpriced My House, Not Me!

Confirmation bias, what is it? It is the psychological thing within most of us that colors our ability to admit we are wrong. I suffer from it mostly within the realm of investing. When I make an investment, I am never wrong. But of course, I am, many times. But I cannot admit it until its too late. Because I am so smart, I cannot be wrong!

Read More

house and advisor

Key Findings for Real Estate Agents On Mortgage Lenders

Key Findings for Real Estate Agents: There was an extensive report done by a research, marketing and communications firm based in Washington, DC. The firm has more than 30 years in the field of research with deep experience in the fields of financial services, housing and technology. I want to show you the results of some of this research as it relates to the mortgage industry. It will help Realtors and mortgage consumers better pick a mortgage lender.

What were the key findings for real estate agents?

Below are four major findings from the research that Realtors see as their main problem with mortgage lenders: Read More

Refinance

Latest Bond Market News

I am going to continue to post, when appropriate, updates from the service I use called MBS Quoteline, that updates me on the bond market. Remember that in general, inflationary news is bad for the bond market and interest rates, and deflationary or recessionary news is positive for the bond market and interest rates. The news for today is: Read More

interest rates

Latest Bond Market Report – January 2020

The 10 Year Treasury Bond was at 1.822% on January 10th 2020.

It was 1.847% as of October 28th 2019.

So you can see that rates have been fairly flat for the last 2+ months.

The 10 Year Treasury Bond is not a direct correlation to mortgage rates. It is simply good to know historical information on Treasury bond rates.

Read More

interest rates

Latest Bond Market Report – June 2019

The 10 Year Treasury Bond was at 2.08% as of last Friday*. This is the lowest it has been in a long time.

QUESTION: But what does this mean for mortgage rates?

ANSWER: In general, mortgage rates are flat recently, but down over the last few months.

QUESTION: Do mortgage rates rise and fall in lockstep with the 10 Year Treasury Bond?

ANSWER: No.

QUESTION: What variables affect mortgage rate quotes.

ANSWER: Loan size, loan type, property type, credit score, down payment, debt ratios, and more.

Where are the 10 Year Treasury Bond, and more importantly mortgage rates, headed next? Check back here to see!

*The source for the 10 Year Treasury Bond quote comes from here: https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx

interest rates

Latest Bond Market Report – October 2019

The 10 Year Treasury Bond was around 1.8% as of October 28th 2019.

The 10 Year Treasury Bond is not a direct correlation to mortgage rates. It is simply good to know historical information on treasury bond rates.

On August 2nd 2019 the 10 Year Treasury Bond was 1.846%.

On September 3rd 2019 the 10 Year Treasury Bond was 1.461%.

Below are some interesting historical numbers:

In 2018 the average yield of the 10 Year Treasury Bond was 2.91%.

In 2017 the average yield of the 10 Year Treasury Bond was 2.33%.

In 2007 the average yield of the 10 Year Treasury Bond was 4.63%.

In 1997 the average yield of the 10 Year Treasury Bond was 6.35%.

In 1987 the average yield of the 10 Year Treasury Bond was 7.18%.

In 1977 the average yield of the 10 Year Treasury Bond was 7.42%.

Where is the 10 Year Treasury Bond headed next? Stay tuned!

*The source for these numbers comes from:

https://www.macrotrends.net/2016/10-year-treasury-bond-rate-yield-chart

and

https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx

interest rates

Latest Rate News. And Are Loan Limits Changing?

Latest Rate News TRANSCRIPT:

Justin: We are on. Hey, Brian. This is Justin and we’re here with the Mortgage Market Minute. What do you have for me today?

Brian Martucci: Well, I think the topic of the day is probably going to be interest rates and the odd thing to me is that a lot of people do not realize that interest rates are up a little bit, not a lot, but people, when the media starts to hammer the public with the fact that rates are down, rates are down and they repeat it all the time. Read More

tree being cut

Lending Tree Falls Hard…Goes Boom

One motto of Lending Tree is, “when lenders compete, you win.” Yes, I agree. But that should be expanded to be considered even somewhat accurate. If Lending Tree were my company I’d say, “when experienced, legitimate, local lenders compete, you win.” But then , I’d have just put myself out of business. So I guess I would not say that if I owned Lending Tree or some other “lead generation” website. Read More

Deal Of The Day Sale

Let’s Get A Better Deal At All Costs

I have had clients who always think, “Let’s get a better deal at all costs”. I had clients who applied for a refinance almost 4 months ago. Interest rates dropped for quite a bit of that time period. It seemed like once a month they were asking me for a better deal than I had originally locked them in at. Getting a better deal is fine. Steamrolling everybody in your path to pick up each 1/8% rate drop is another. Read More

Woman stressed over shopping

Loan Shopping

Shopping for a loan is easy, kind of like window shopping. You poke your head in the window, take a look, maybe you go in the store and ask a few questions, maybe you go to another store, who knows. You are not obligated to buy from anyone, and you are going to check every source you can TO GET THE BEST PRICE. It’s all about the best price after all (he said sarcastically).

It is all about the best price, as long as you get what you wanted in the first place. And this is the problem in shopping for goods and services, people are so focused on the price, they lose of track of making sure they are going to get what they need. You have to ask a lot of questions, and be asked a lot of questions, to ensure the process will go smoothly and to ensure you will get the price being promised. If you are not being asked a lot of questions when you ask about a mortgage, something is wrong. Read More

lock and key

Mortgage Interest Rate Lock-In Information

You would think locking-in an interest rate for your mortgage is a very simple process. What is there to think about? You are given your choices, and you pick one and lock-in. Right? Not much to it?! It’s amazing what the average consumer doesn’t know, and what they should be thinking about. Read below to learn about what will be important for your next mortgage application and interest rate lock-in. Read More

Percent Character rates

Mortgage rates, why so different at different banks?

Mortgage rates, why so different at different banks? Are you puzzled why Conventional mortgage rates vary so much, day to day and from bank to bank? Or do you wonder why advertised rates are different when you call a mortgage lender? Many times rates are not all that different, they are just very complicated for a bank or mortgage broker to accurately publish due to numerous variables.

Most people are not aware that Fannie Mae and Freddie Mac have a whole chart of pricing “add-ons”. Add-ons are an amount (expressed in points or rates) that are added on to the “base rate” in certain situations. Some examples of add-ons are for:

  • condos
  • investment properties
  • multi-family properties (a 2 unit, for example)
  • credit score
  • extended lock-ins beyond the standard 30-60 days
  • loan-to-value Read More
Grocery Shopping Supermarket

Mortgage Shopping

Whether a consumer is calling a bank, a mortgage banker or a mortgage broker; all mortgage providers fund their mortgages through the same sources. Because of this, mortgage rates are very close from one lender to another. Mortgage shopping is hard, however.

The purpose of “advertised” rates is to get the phone to ring. I am sure no one is surprised to find out that the ad for the cheap Mercedes is not real, and that if you want all the options, powerful engine, wheels and goodies you see on the picture in the ad, the cost goes up quite a bit. Read More

free lunch

Mortgage Shopping, #2

Is there a free lunch, or isn’t there? My last post about mortgage shopping suggested that interest rates are only a slight bit different (1/8%) from lender to lender, and that the consumer needs to focus on performance, customer service and execution more than price. But no one does, do they? And we create our own customer service problems by seeking the lowest price, and expecting the best service. It happens with mortgages, movers, furniture, contractors…you name it. We have been creating our own service and product hassles since the dawn of time.

And the reason I have chosen to write about this again is a recent client who asked me to serve a piping hot free lunch. How you ask? Read on… Read More

Savings Budget Investment

No cost refinancing a.k.a. no cost refi

I frequently have people ask me for “one of those no-cost refi’s”. Some people think that mortgage lenders are so hard up for business that they are willing to lose money and simply pay the closing costs for the mortgage borrower. I don’t know of any businesses where losing money is part of the process of making money. A no-cost refi actually comes with a cost…a higher interest rate.

The reality is that a no-cost refi is one where the closing costs are built into a higher interest rate. Read More

sale

Paying Points On A Loan

Is paying points on  a loan a good idea? When you buy a new home or refinance, it can be a nervous and exciting time. And getting excited and nervous causes people to over analyze and sometimes make poor decisions. Sometimes a client will ask for a lower rate by paying discount points. Each discount point is 1% of the loan amount. This is $1,000 per $100,000 in mortgage. It sounds great to get a rate that is a half percent lower than what you hear about in the news or see online (shopping for rates online is not accurate, see this story for more on that), but what about the costs? Read More

Mortgage House Money

Prepaying Your Mortgage Saves You Money, But How?

Prepaying your mortgage is a great idea if you can afford to pay extra. Especially if you are going to be in your house long term, or forever. The best way to save money on debt is to not have it! But many people do not realize that prepaying a fixed rate loan does not reduce the monthly payment. Prepaying a loan simply shortens the term. So prepayment builds equity faster, and ends the loan sooner. You save money by having the loan for a lesser amount of time. Read More

price increase

Price Increase To Mortgages

FHFA is the Federal Housing Finance Agency. They regulate Fannie Mae and Freddie Mac. FHFA just announced another round of Fannie Mae and Freddie Mac guaranty fee increases. These are the fees that Fannie and Freddie charge lenders to guarantee loans. And of course Fannie and Freddie have the backing of the U.S. government. Without this federal backing, Fannie and Freddie would not exist. Or they certainly would not exist in the size and scope they have over decades and decades. Read More

Percent Character rates

Rates Are Still Low

Interest rates remain low, and have been low, for years it seems like. Although a consumer may complain about getting 5.625% instead of 4.875%, rates have been in a very tight range for quite a long time. We have not had a rate with a ‘6’ in front of it for years. And I can remember when 6% was thought to be a very low rate!

Of course, the whole discussion of rates has to incorporate the price of what one is financing. Read More

interest rates going up

Rates Can Go Up?

Interest rates are up, not a substantial amount, but enough to remind everyone that interest rates can go up as well as down. Rates are up about .25% to .375%, depending on the loan product and some other variables. I find that insignificant. But a homeowner who wanted to refinance to a Conforming 15 Year Fixed Rate at 3.125% who is now being quoted 3.5% is astonished. First, most of us forgot that rates can go up. We thought they only had one trajectory….down. Second, when the 15 Year Fixed Rate was at 3.125%, the client was hoping for 2.875%! And if rates got to 2.875%, people would hope for a little more. The financial psyche of we humans is fascinating. The deals we get are never good enough! We always want more. Read More

interest rates going up

Should I Buy Now And Avoid Higher Interest Rates?

Should I Buy Now And Avoid Higher Interest Rates?

This is a common question I get. Potential home buyers will worry that rates are going to spike, after all, “how long can they stay this low,” goes the logic. So some buyers assume they should buy now, at any price, and avoid a future rate increase. I am not sure how long rates can stay low, they have been low for almost two decades in Japan! But, I thought for fun, we’d look at some different numbers. Keep in mind the below are based off of broad assumptions of my own: Read More

stickman looking up

Stick People Say Rates Are Going Up

Hello John.

Hello Doug.

Let’s talk about interest rates.

Why would we do that? I just bumped into you on the street and I am on my way to work.

You are not on your way to work. We are stick people, in a skit, on some guy’s website. We only exist because of his imagination. So let’s talk about mortgage rates.

Okey dokey.

So here is why interest rates will go up. First, our deficit is on par with Greece, even worse when you consider our unfunded entitlement mandates, which are ludicrous. When the world figures out what an economic mess we are in, they’ll demand higher rates to lend us money. Second, interest rates have only been lower than they are now a few other times in 220 years of recorded interest rate history. Do I need to go on?

Please do, smart stick man. Read More

Thanks Anyway, I Got A Really Good Deal Elsewhere…

Thanks Anyway, I Got A Really Good Deal Elsewhere. Ever heard that? But never assume the person you are talking to has your best interests in mind. Always check with trusted sources, experienced sources, and always ask a lot of questions. And…eat all your vegetables, wear clean underwear, and look both ways before you cross the street. Now you are all set with good advice for life. So what is my point to all this? Read More

fifty percent off

The Best Mortgage Rate

Often a client will start a mortgage loan conversation with, “I need to get the best rate.” And that often confuses me. What does the “best rate” mean? Does that mean you won’t work with a lender who doesn’t have the very lowest interest rate on the day you are ready to lock-in an interest rate? Does it mean you won’t give any consideration to experience, execution, responsiveness and delivery?

Would most people work with a mortgage lender willing to lose money? Read More

interest rates are up

The Government Controls Mortgage Rates?

It’s that time again, the time when people seem to think a government edict can control a massive market. I have gotten dozens of calls and emails that go something like this:

“I hear Ben Bernanke is pushing rates down again.”

“I hear the government is pushing rates down.”

“I hear rates just dropped yesterday.”

The government does not control interest rates, unemployment, economic growth, etc. Read More

trading monitor

The Latest On The Bond Market

Below is a copy of some data I received from a bond market data service I use. It reports on bond market news several times daily. It helps me get a gauge on which way interest rates may go for the day and in general. I wanted to paste a recent email they sent me, and in parentheses and in CAPS give you my interpretation. Below is the data with my comments. Read More

news media

The Media Can Be Downright Silly

The media causes hysteria. It is what they are paid to do. As a newsperson you have to make something sound alarming even if it is not, to attract eyeballs to sell ad space. This is positively ridiculous. But I guess somehow the bills have to get paid. And in the news world, it is with ads and marketing. But it would be nice if consumers remembered this and took a harder look at some news reports and applied a little logic.

Read More

boom comic book image

The Refinance Boom is not Over? Refinance Your 15-Year to a 30-Year!

Actually, the refinance boom is indeed over. However, there are a fair amount of people that still need to refinance. For example, I know of many people who have excellent interest rates on a 15-Year fixed rate mortgage. They thought they would be in their home forever and wanted to get the mortgage paid off over a shorter term. But now have suffered a job setback or some other sort of financial blow, and need to revert to a 30-Year mortgage to reduce the monthly payment.

Let me give you an example.

Let’s assume the following:

• A homeowner owns a home with a $300,000 loan that was refinanced at the bottom of the market in late 2012 or early 2013. And it has a 3.00% 15-Year fixed rate.
• He currently owes $284,000.
• This principal and interest payment is $2,071 not including taxes and insurance.

What is the outcome?

If this homeowner refinanced the current principal to a 30-Year fixed rate today at 4.625%, the principal and interest payment would be $1,460. This would save over $600 a month! I’d hate to see someone lose a 15-Year mortgage, which enabled them to get their mortgage paid off quickly. However, if economic problems have struck someone and they need monetary relief, refinancing to a 30-Year fixed rate mortgage might be the answer.

boom comic book image

The Refinance Boom is not Over? Refinance Your 30-Year to a 15-Year!

Actually, the refinance boom is indeed over. However, there are a fair amount of people that still need to refinance. For example, I know of many people who have excellent interest rates on their 30-Year fixed rate mortgages, and plan to be in their home for a long time or possibly forever. These people should consider giving up their low 30-Year fixed rate. They can get a still quite low 15-Year fixed rate and save a small fortune over time. Read More

boom comic book image

The Refinance Boom is not Over? Refinance Your ARM to a Fixed Rate!

Actually, the refinance boom is over. However, there are a fair amount of people that still need to refinance. The problem is that the people that have not refinanced when rates were low simply don’t realize that they should still refinance. The people that obviously needed to refinance have already refinanced, in some cases multiple times. There are many people left that can refinance.

Read More

boom comic book image

The Refinance Boom is not Over? Refinance Your Fixed Rate to an ARM!

Actually, the refinance boom is indeed over; however, there are a fair amount of people that still need to refinance. For example, I know of many people who have decided to move sooner than they imagined. I hear of consumers who thought that they would live in their homes for the long haul, but then due to circumstances that were a surprise to them, they have now decided to leave in the next few years. Read More

boom comic book image

The Refinance Boom is not Over? Refinance Your HELOC!

Actually, the refinance boom is indeed over. However, there are a fair amount of people that still need to refinance. There are a stunning amount of home equity lines (HELOCs) outstanding and most people will need to refinance those. Most HELOCs were set up so that the first ten years of the loan only require interest only payments and no principal is due. Then, in year 11, the principal would start to amortize. And it amortizes over 20 years, not 30. This is a problem because Read More

down arrow

They Go Down Forever!

Rates appear to be going down forever. There is no end to how low they can go, is there? Of course there is. And I find consumers have gotten used to not only low rates, but the fact that they will keep dropping. So they procrastinate and put off refinancing because rates will be lower tomorrow. But they may not. Rates can only go so low. We are at the lowest point for rates in our country. But the weak economy not only produces low rates, it produces doubt and fear.

Read More

question mark pile

Top 15 Questions to Ask a Lender or Broker Before You Apply for a Mortgage Loan

It may seem odd that someone in the mortgage business wants to discuss how to help consumers find the best mortgage lenders. People search for mortgage providers every day without the benefit of professional help. So, I figured why not help people whether they find their way to me or someone else? Below I’ve listed the most important mortgage questions that you need to ask before you apply for a mortgage loan. Read More

online shopping

Try Before You Buy?

Have you ever found yourself sneaking a grape or a cherry tomato at the grocery store, before you buy? You just want to get a taste before you buy the whole bunch, right? Who doesn’t like to try before you buy? Maybe that is OK for fruit, but not for service providers. It’s a lesson some people need to learn. Some people need to learn to “shop” and then “decide”, instead of “decide” and then “shop”. Read More

calculator

VA Refinance Recoupment Period

The United States Department of Veterans Affairs requires that the closing costs on a VA refinance be recouped in 36 months or less. If the recoupment period is over 36 months the loan will be rejected.

In other words, the refinance closing costs divided by the monthly savings has to be 36 or less.

For example, if the closing costs on a VA refinance are $3,000. And the monthly savings on the refinance are $400 a month. The recoupment period is 7.5 months because $3,000 divided by $400 a month in savings = 7.5. This is well within 36 months. Read More

piggybank savings

Waiting to Buy, Is It a Good Idea?

I have had numerous clients mention recently that they may wait to buy because they want to save for a larger down payment to have a 20% down payment and avoid mortgage insurance. While it is laudable to want to have a nice chunk of down payment, waiting may not pay off.  Some think mortgage insurance is a waste of money, and that they should avoid it at all costs. Again, this is commendable, but maybe not worth waiting for. I’ll show some numbers to explain further. Read More

cut debt

We Cut Nothing. It’s All Still Broken!

So the debt ceiling is all fixed? Too bad. What else will generate so much hyperbole from our politicians? There were stories of terrorism, global disaster, and economic meltdown. My favorite was this one from Nancy Pelosi who insisted the debt limit be raised massively, “We’re trying to save life on this planet as we know it today.” Rep. Michelle Bachmann worried that raising the debt limit at all would be “like saying we embrace being Greece.” It was fun to watch. Rep. Maxine Waters said the final compromise bill “may be the single-worst piece of policy to ever come out of this institution.” Maxine needs to brush up on her history, this comes nowhere close.
Read More

hamburger

Welcome To McDonald’s! May I Take Your Order?

Often times a Realtor will suggest to a homebuyer that they use the real estate company’s “in-house” lender. Realtors don’t usually push these lenders on their buyers, but they are definitely suggested many times. Every wonder why? It is important to know how these lenders are structured, and how they operate. Read More

historical rate chart

Where are interest rates going?

It seems the general consensus is that interest rates are going to drop “because of some Federal program” or, “because the Feds are going to make them go down to boost the economy.” It seems we have more believers in and fans of central planning than I ever imagined. Let’s make one thing clear, interest rates in the long run, are controlled by the marketplace. The Feds cannot decree 3% rates for the next 5 years while we work through this economic mess. Even the Feds ultimately cannot control the marketplace. However, the Feds can impact interest rates in the short run with monetary policy decisions, and the purchase of mortgage backed securities. Ultimately the marketplace sets interest rates after taking into account inflation and deflation, government monetary policy, supply of and demand for funds, and future economic expectations.

It has also recently been discussed that the cost of funds is much higher for lenders, and the availability of credit to then turn around and extend to the public is diminishing. Hence, it is said that it is hard for banks to drop rates, regardless of what the Feds do, in light of less available and more costly sources of funds. Read More

interest rates going up

Where Are Mortgage Rates Going?

Everyone is watching mortgage rates these days. And everyone knows they are much higher now than in 2020 and 2021! But are they high? Are they outrageous? And what exactly are they? How are they determined? Will they ever go back to when they were 3%?

Are mortgage rates high?

Looking at the historical numbers, today’s mortgage rates are above average. But today’s rates are  not outrageous, as some think. Read More

Percent Character rates

Will Interest Rates Stay Low?

Just when everyone thought rates were on a straight trend line pointing down! A few days ago, on Friday, December 4, 2009, there was a fairly bullish jobs report. Bond yields jumped up, hence, interest rates rose a bit. For a few days, I was locking-in clients at 4.75% with zero points on a 30 year fixed-rate conforming loan. A conforming loan is a loan that is equal to $417,000 or less. Read More

Work with individual or a team

Work With An Individual Loan Officer or A Loan Officer Team?

Should you work with an individual Loan Officer or a Loan Officer team? This discussion will stir up some controversy. I will likely get some angry comments as well as some supportive comments. Keep it classy, and let’s discuss! Read More

hamburger

Would You Get Surgery At McDonald’s?

It never ceases to amaze me how people treat the most expensive transaction that they will ever do in life as a commodity. Would you get surgery at McDonald’s if they got into the health care business because it was the cheapest place to get it? Or would you talk to numerous different doctors based on experience, referrals, track record, and interaction with their staff and systems? Read More