MORTGAGE INTEREST RATES… Where are they headed?

Guest Blogger: Today's post is written by Sacramento Mortgage Expert, Matt Gouge.  All of his contact info and more can be found at this website: www.mattthemortgageguy.com. Thank you Matt for providing this great info for potential buyers in our Sacramento Real Estate Market.

MORTGAGE INTEREST RATES… Where are they headed?

Today being the 2^nd day of the Federal Open Market Committee meeting it seems only fitting that I write about interest rates and where we are headed. This afternoon is the point in their meeting where they announce their policy decision (typically whether to change the fed funds target rate)…

When the Fed met in prior months they used the word “patient” when referring to when they would begin a federal rate hike. This key word was missing in the March meeting which some may feel is an indicator that the rate hike is coming sooner rather than later. In laymans terms, rates are going to go up, it’s not an “if” but a “when”…

I have my opinion about what exactly is going to happen to interest rates in the future but my opinion is merely that, an opinion. I will get to my crystal ball forecast at the end of this article but first I would like to make a simple point that folks should be aware of…

What everyone should know…

Rates are constantly moving. By constant I mean that rates change on a daily basis. There are economic factors that influence rates that are being measured, monitored, analyzed daily. Those of us who follow what is going on in the markets and pay attention to data know that there are numerous reports that can have an impact on rates and the affects can be dramatic and far reaching if the numbers presented are different from expectation…

What can we do?

As a mortgage professional who advises clients on a daily basis and really aims to educate and assist clients in making informed decisions I come across this question often. “What do you suggest Matt?”

The reality is that it truly is a great time to buy. I say that with sincerity and with confidence for a couple of reasons. Today’s historically low interest rates and great, stable loan programs are making homeownership affordable and safe. I use the word safe because we all know someone who entered into an adjustable rate mortgage or interest only type of loan 8 years ago that exploded on them when they saw what was in the fine print. These loans don’t exist today. Most people who qualify for a mortgage are able to get a 30 year fixed rate under 4%. Most of us don’t realize how amazing that is. Forget the fact that the home you wanted is $40,000 more expensive than it was last year. From a financial standpoint the loan terms you enter into when you purchase your home are more important than the price. For example, a 1% increase in interest rate is going to increase your monthly payment by about $200/mo on a $300,000 loan.

So my advice is to make it happen. Find a payment that you are comfortable with, then ask a mortgage professional to translate that payment and your down payment funds into what price range you should target. Then settle into a home that you own. A home that will appreciate in value and a payment that will remain constant despite what the rents around you do. We all have to spend money on a monthly basis to have a roof over our heads, we might as well spend it on something we own.

Finally - getting to your rate predictions…

Ok, Based on what I know and how the wind is blowing today here are my short and long term interest rate predictions. Rates will remain low for another 6 months with a fed increase beginning in late 2015- early 2016. In the window of 18-24 months we will see a SLOW uptick in rates that will put us in the low 5’s for a 30 year fixed rate conventional loan in mid 2017.

As always I am more than happy to answer any mortgage related questions from future clients or real estate industry friends. I hope to hear from you soon, Please feel free to reach out anytime!

Connecting people and homes, one loan at a time…

#MattTheMortgageGuy

916-529-7600

NMLS # 1088993

www.mattthemortgageguy.com

Thanks again Matt for your guest blog post.

Connect with me via Facebook, YouTube, and Follow my Blog.

clear skies,
Doug Reynolds
Realtor
916-494-8441 

         

www.RealEstateWithDoug.com

www.CollegeGlenRealEstate.com

Why Bad News Can Be Good for Home Loan Rates

Why Bad News Can Be Good for Home Loan Rates

It seems counter-intuitive that negative economic news can actually be good for home loan rates, but there's a pretty simple explanation.

First, remember that big money managers in search of higher returns avoid holding onto cash by investing in both stocks and bonds.

Second, despite what the financial media often report, home loan rates are based on the performance of mortgage backed securities—a type of bond.

Third, prices of stocks and bonds respond to a supply-and-demand dynamic, just like anything else in the economy.

Putting these facts together, it begins to make sense that when the economy is “on fire” and economic reports are on the uptrend, investors tend to put more money into stocks. That’s because stocks offer higher returns, even though they are generally more risky.

However, in order to put money into stocks, investors must remove money from less-risky bonds. The result is a decreased demand in bonds causing bond prices to worsen, and therefore home loan rates to go higher.  
On the other hand, when the economy is sluggish, world news is unstable, or  economic reports are negative, money managers tend to take money out of higher-risk stocks and move it into less-volatile bonds. As demand for bonds increases, bond pricing improves and home loan rates go down.

While it may seem odd that home loan rates improve when economic news is sluggish, it actually makes sense when you look at the bigger picture!

Connect with Doug Reynolds Real Estate via Facebook, YouTube, and Follow his Blog.

clear skies,

Doug Reynolds

Realtor

916-494-8441

         

www.SellWithDoug.com

www.BHGshortsales.com 

www.CollegeGlenRealEstate.com

What's the difference between the Interest rate on my mortgage and the APR???

Here's a great article from my favorite lender team: The Perpich Group of Republic Mortgage in Folsom.  Erick and Lupe and the best lenders in the business and take great care of all my buyer clients.  Erick can be reached at 916-549-3577.

APR vs Interest Rate

There are many terms, concepts and general language that might seem complex in the mortgage industry, but APR–or annual percentage rate–and interest rate seem to combine to create one of the the two most confounding terms in the industry.

On it’s own, interest rate seems nearly self-explanatory and the definition makes sense to most prospective homeowners. APR, however, often requires more explanation.

Interest Rate

Interest rate refers to the rate at which a borrower pays back interest on a loan that they take from a bank or other lender. Broken down, the interest rate is the percentage of the principal loan amount the borrower pays back during a certain period of time, and a year is the most common time frame to use as a metric. The lender predetermines the interest rate and the time frame for repayment of principal and interest.

Annual Percentage Rate (APR)

The most basic explanation of APR that it bundles all the fees associated with your loan together with your actual interest rate, and “annualizes” that into one all-inclusive rate. In other words, the APR is a finance charge formulated as an annual rate of interest on repayment of loan. As if things weren’t confusing enough between interest and APR, the APR also adds in the nominal APR, which is the simple interest rate over the course of a year while the effective APR includes any fees agreed upon plus the compound interest rate over a year.

Quite simply, the APR gives a more comprehensive perspective of what the loan costs the borrower over the life of the loan.

Connect with Doug Reynolds Real Estate via Facebook, YouTube, and Follow his Blog.

clear skies,

Doug Reynolds

Realtor

916-494-8441

         

www.SellWithDoug.com

www.BHGshortsales.com 

www.CollegeGlenRealEstate.com

What's going on with Sacramento Mortgage interest rates in 2014??

Doug Reynolds, a Sacramento Area Realtor, sits down for a chat with Loan Officer/Lender Erick Perpich of Republic Mortgage.  In this episode, Erick discusses what will be effecting interest rates for home loans in 2014.
For the most recent and current/exact rate, call or email Erick directly and he'll get back to you right away with detailed info.

Erick Perpich
916.549.3577
eperpich@repmtg.com
www.ThePerpichTeam.com



Connect with Doug Reynolds Real Estate via Facebook, YouTube, and Follow his Blog.

clear skies,

Doug Reynolds

Realtor

916-494-8441

 

www.SellWithDoug.com

www.BHGshortsales.com 

www.CollegeGlenRealEstate.com

Sacramento Real Estate July - August 2013 video Market Update

Doug Reynolds, a Sacramento Area Realtor, discusses the stats and trends in the local market.  This month he predicts a shift in the market is beginning to occur and believes that inventory in the Sacramento area will be up to a few months by the end of the year.  He also believes that buyers will have equal power in the market soon too.  Take a look and share your opinion in the comments section.  Don't forget to check back each month.

clear skies,
Doug Reynolds
Realtor
916-494-8441
 
www.SellWithDoug.com
www.BHGshortsales.com

Sacramento Real Estate June - July 2013 video Market Update

Doug Reynolds, a Sacramento Area Realtor, Discusses the latest statistics and also gives his own prediction of the market.  The median price increased again in May 2013 to $240,000.  That is 42.2% higher than one year ago!  In his prediction, Doug is seeing subtle signs of shift starting to occur in the market.  Slowly a little more inventory is starting to come on the market, slowly there are some price reductions here and there as well.  Doug predicts that the market will continue to increase for a few more months but as the fall and winter months approach that market is going to be a bit more balanced and not favor sellers quite so much.  Only time will tell.  What is your prediction??

clear skies,
Doug Reynolds
Realtor
916-494-8441
 

www.SellWithDoug.com

www.BHGshortsales.com

Interest rates are HOW LOW?!?!?!

Rates are still ridiculously low!!  Owners are refinancing like crazy and low rates have are a large reason for the market seeing rising prices and multiple offers on properties in the Sacramento Area.  here's a recent AP article talking about the record low rates.

Rate on US 30-year mortgage hits record 3.31 pct.

 

By CHRISTOPHER S. RUGABER, AP Economics Writer

Average U.S. rates on fixed mortgages fell to fresh record lows this week, a trend that is boosting home sales and aiding the housing recovery.

Mortgage buyer Freddie Mac said Wednesday that the average rate on the 30-year loan dipped to 3.31 percent, the lowest on records dating back to 1971. That's down from 3.34 percent last week, the previous record low.

The average on the 15-year fixed mortgage also dropped to 2.63 percent. That's down from 2.65 percent last week and also a new record.

The average rate on the 30-year loan has been below 4 percent all year. It has fallen further since the Federal Reserve started buying mortgage bonds in September to encourage more borrowing and spending.

Home sales and construction are rising, providing a much-needed boost to the economy. Home prices are also increasing, which makes consumers feel wealthier and more likely to spend.

Lower rates have also persuaded more people to refinance. That usually leads to lower monthly mortgage payments and more spending. Consumer spending drives nearly 70 percent of economic activity.

Still, the housing market has a long way to a full recovery. And many people are unable to take advantage of the low rates, either because they can't qualify for stricter lending rules or they can't afford the larger down payments that many banks require.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans also remained at 0.7 point.

The average rate on a one-year adjustable-rate mortgage ticked up to 2.56 percent from 2.55 percent. The fee for one-year adjustable-rate loans rose two-tenths to 0.5 point.

The average rate on a five-year adjustable-rate mortgage 2.74 percent, the same as the previous week. The fee was unchanged at 0.6 point.

Read more here: http://www.sacbee.com/2012/11/21/5002256/rate-on-us-30-year-mortgage-hits.html#storylink=cpy

clear skies,
Doug Reynolds
 
www.BHGshortsales.com

List of Improving Housing Markets Expands to 99 in September

RISMEDIA, September 11, 2012—

The number of improving housing markets across the country rose to 99 in September, according to the National Association of Home Builders/First American Improving Markets Index (IMI), released recently. This is up from 80 metros that were listed as improving in August and includes representatives from 33 states as well as the District of Columbia.

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. Markets added to the list in September include such geographically diverse locations as Tucson, Ariz.; Jacksonville, Fla.; Springfield, Ill.; Greenville, N.C.; and Bend, Ore.

“The number of improving housing markets grew by 19 in September as 68 metros retained their spots, 31 new metros were added and just 12 dropped off the list,” notes Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “This solid growth is an encouraging sign that housing continues on a slow but steady recovery path that is gradually advancing from one local market to the next.”

“More metros across the country are experiencing a sustained uptick in house prices, employment and new building activity as rising consumer confidence in local market conditions pushes more people to consider a new-home purchase,” observes NAHB Chief Economist David Crowe. “That said, overly tight lending conditions for builders and buyers continue to slow this process considerably.”

“Combined with recent positive reports on builder confidence, housing starts and new-home sales, the September IMI adds to the growing consensus that housing is finally moving in the right direction, which in turn is spurring more potential buyers to get off the fence,” adds Kurt Pfotenhauer, vice chairman at First American Title Insurance Company.

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three measures for at least six months following those measures’ respective troughs before being included on the improving markets list.

A complete list of all 99 metropolitan areas currently on the IMI, and separate breakouts of metros newly added to or dropped from the list in September, is available at www.nahb.org/imi.

clear skies,
Doug Reynolds
 
www.BHGshortsales.com

History of Mortgage Interest Rates

By Marcie Geffner • Bankrate.com

Mortgage interest rates have been pretty attractive for a long stretch of time. So long, in fact, that many homebuyers and homeowners might not realize that rates haven't always been this low. Mortgage interest rates in the 4-percent range were unheard of until 2010, and rates in the 5-percent range were unknown prior to 2003, according to Bankrate.com surveys through the years and a chart of monthly average mortgage interest rates tracked by the Federal Reserve since 1971.

Prior to 2003, higher mortgage interest rates were the norm. In the early 1970s, rates hovered in the 7-percent range and spiked up above 9 percent in late 1975, late 1976 and most of 1978. At the end of the decade and throughout the 1980s, mortgage interest rates rarely dipped lower than 10 percent.

In the early 1980s, mortgage interest rates brushed the stratospheric highs of 18 percent and even 19 percent. Imagine trying to get a home loan with an interest rate of 18 percent. At that rate, the mortgage interest deduction would be a very lucrative income tax perk, but the monthly payment on a loan would be far more painful than a typical mortgage today.

During the 1990s, mortgage interest rates ranged from around 7 percent to roughly 9 percent for many years. It was only in 2000 that rates began to fall to earth. They held at less than 9 percent in 2000, less than 8 percent in 2001 and less than 7 percent in 2003.

Mortgage interest rates are an important factor in many major financial decisions. When rates are low, it can be a good time to buy a home or refinance an existing mortgage. When rates are high, it can be smart to pay off your mortgage. Rates should also be considered when deciding whether to refinance from a fixed rate to an adjustable-rate mortgage, take out a second loan or tap a home equity line of credit.

clear skies,
Doug Reynolds
 
www.BHGshortsales.com

4% Interest Rates ... Are You Freakin' Kidding Me?

Doug Reynolds, a Sacramento Area Realtor, discusses the history of interest rates in America and shows how the current interest rates in 2012 are at record lows for home buyers.  The unheard of interest rates of 3.5% and 4% combined with the bottom of the market for prices are creating the best time to ever buy real estate in Sacramento, the beginning of 2012.

What is your interest rate at?  Did you ever purchase a home with a mortgage above 12%?

clear skies,

Doug Reynolds

 

www.BHGshortsales.com

How Low Can Rates Go?

By VICKIE ELMER – New York Times

IF your New Year’s resolutions include buying a house or refinancing, the Federal Reserve has you covered. It has committed to keep long-term interest rates low through next year, so a 30-year mortgage will be pegged about where it is now — 4.32 percent in New York — at least through spring, said Frank E. Nothaft, the chief economist at Freddie Mac.

“Rates are very much at the bottom,” Mr. Nothaft said. But, he added, they may start inching up in the second half of the year. “If you’re planning to refinance, do it sooner rather than later.”

In order to cash in fully on some of the lowest interest rates ever recorded, buyers and owners need to start taking steps now, experts say. Rather than look for a house you really want, they suggest first finding out how much money you can afford to borrow, and what you can do in the next three to six months to improve your creditworthiness.

“Sometimes it takes a few extra months to get your ducks in a row,” particularly if there are mistakes or blemishes on your credit report, said Gene Tricozzi, the president of Northern Funding Corporation, a mortgage brokerage in Clifton Park, N.Y. If your score is below 700, your mortgage interest rate could be a quarter to a half percentage point higher than for those with stronger scores, experts say.

clear skies,

Doug Reynolds

 

www.BHGshortsales.com

How Low Can Rates Go?

By VICKIE ELMER – New York Times

IF your New Year’s resolutions include buying a house or refinancing, the Federal Reserve has you covered. It has committed to keep long-term interest rates low through next year, so a 30-year mortgage will be pegged about where it is now — 4.32 percent in New York — at least through spring, said Frank E. Nothaft, the chief economist at Freddie Mac.

“Rates are very much at the bottom,” Mr. Nothaft said. But, he added, they may start inching up in the second half of the year. “If you’re planning to refinance, do it sooner rather than later.”

In order to cash in fully on some of the lowest interest rates ever recorded, buyers and owners need to start taking steps now, experts say. Rather than look for a house you really want, they suggest first finding out how much money you can afford to borrow, and what you can do in the next three to six months to improve your creditworthiness.

“Sometimes it takes a few extra months to get your ducks in a row,” particularly if there are mistakes or blemishes on your credit report, said Gene Tricozzi, the president of Northern Funding Corporation, a mortgage brokerage in Clifton Park, N.Y. If your score is below 700, your mortgage interest rate could be a quarter to a half percentage point higher than for those with stronger scores, experts say.

clear skies,

Doug Reynolds

 

www.BHGshortsales.com

Real-time Mortgage rate quotes

The home loan comparison website MortgageMarvel.com allows borrowers to obtain real-time interest rate quotes based on the loan amount, the property's value and the ZIP code, all while remaining completely anonymous. Pricing is updated as quickly as it changes — usually daily, but sometimes more frequently, says Rick Allen, director of strategic initiatives.

However, the best and most accurate way to get an exact rate quote for you is to get preapproved with an experienced local loan officer.  They will be able to provide you the best information but the mortgage marvel website is a good guideline tool to reference.

clear skies,
Doug Reynolds
 
www.BHGshortsales.com

Mortgage Rates are at Record lows This Month

Here’s a recent article from the LA Times talking about the new record lows for interest rates this month.  I recently had a client lock into a 3.75% interest rate on a 30-year fixed mortgage.  They are quite happy to say the least.  It’s almost shocking to see how low rates are right now.  I can guarantee one day we will be looking back on this economy and just be amazed by how low rates got.  Who remembers when rates were at 15%??

clear skies,
Doug Reynolds
 
www.BHGshortsales.com

Mortgage rates hit record lows in Freddie Mac survey

Mortgage rates have plunged to all-time lows amid concerns the economy is stalling again, Freddie Mac said in its weekly survey.

Lenders were offering the 30-year fixed-rate home loan at an average rate of 4.12% this week, down from 4.22% last week, Freddie Mac said Thursday. The 15-year fixed loan was at 3.33%, down from 3.39%.

Both of the rates set records in the survey by the giant mortgage finance company. Borrowers would have paid an average of 0.7% of the loan amount in upfront lender fees and points on the 30-year loan and 0.6% on the 15-year loan, Freddie said.

 Adjustable-rate loans set records or tied previous lows as well, the survey found.

"On net, the economy added no new jobs last month and was the weakest reading since September 2010," Freddie Mac chief economist Frank Nothaft said in a news release.

"Meanwhile, the unemployment rate remained at 9.1%, marking its 31st consecutive month of being above 8%, the longest such stretch in 70 years."

The rate on the 30-year fixed loan had bumped above 5% last February before slowly grinding lower.

It has now been below 4.5% for six straight weeks, setting a previous low record of 4.15% in the Aug. 18 survey. (Freddie Mac began tracking the 30-year loan in 1971.)

The survey asks lenders for popular combinations of rates and fees that they are offering to borrowers with good credit and 20% down payments or 20% home equity in refinancings. Well-qualified borrowers who shop around often obtain slightly better deals.