Mortgage Rates

High-Balance and 2nd Home Loans to Become More Expensive

Both Fannie Mae are Freddie Mac, the two agencies that purchase conforming loans, are going to charge additional fees thus making 2nd (vacation) homes and high-balance loans more expensive. What is a 2nd home and High-Balance Loans? Sometimes my borrowers confuse 2nd home as the home they buy after they have purchased their first home. That's not the case.  A 2nd home is defined as a vacation home; a home that's not rented out and is also not your primary residence. High-balance loans are loans with loan amounts higher than the basic conforming…continue reading →

Mortgage Rates Rise more than 0.5%; at the Highest Levels in 2 Years Now

Fed's announcement last week sent the mortgage rates soaring to the highest levels in 2 years. Fed now sees itself hiking rates and reducing bond purchases faster than what the market anticipated earlier pushing the treasury yields and taking the mortgage rates along with it. According to Freddie Mac's latest Primary Mortgage Market Survey, 30 Year Fixed mortgage rates now average 3.55% with 0.7% of the loan amount as fees/points.  See the screenshot below: As a reference point, on the November 10th Primary Mortgage Market Survey, Freddie Mac Reported 30 Year Fixed average…continue reading →

How Mortgage Interest Works

Knowing how mortgage interest works is pretty important when you buy a house. Your mortgage rate is one of the main things that determine how much you’ll be paying every month towards the home.    So how exactly does it work? Let’s take a look.    How Mortgage Interest Works - The Basics As you probably already know, very few people pay with cash when buying a home. A mortgage just makes sense because it lets you borrow money at relatively low-interest rates.    The interest rate is there so the bank can…continue reading →

Sink or Swim, Locking vs. Floating Your Mortgage Rate

Does locking your mortgage rate make sense? Or should you have a floating rate so you can take advantage of a rate drop?   Here are a few things to keep in mind as you weigh your options. But first, let’s talk about what these terms mean.    Locking Your Mortgage Rate vs. a Floating Rate When you apply for a mortgage, the lender will ask you early on if you want to lock in your rate. They’re essentially saying you can finalize the interest rate you’re willing to pay. From that point…continue reading →

Are Mortgage Rates Still Low?

The last two years have been crazy in the real estate market. Low mortgage interest rates made it a fantastic time to buy a house. The question is - are mortgage rates still low?   Let’s look at the past, the present, and what is expected to happen over the next few months. That’s the best way to understand where we are right now.    Mortgage Rate History Since we just got out of November, let’s use that as our benchmark. According to FreddieMac here are the average rates we’ve seen over the…continue reading →

Fixed Rate vs Adjustable Rate Mortgage (ARM)

Whether you are buying a new home or planning to refinance, you may be asking the question - Adjustable Rate Mortgage (ARM) or Fixed mortgage rate - which one is better? When you are trying to make a decision on whether to take an Adjustable Rate Mortgage or a Fixed Rate, you should consider two factors: How long do you plan to stay in the property? What is the difference in the interest rate between an ARM & a Fixed? Let me elaborate this: Rates on ARMs are usually lower than fixed-rate loans.…continue reading →

Mortgage Rates Climb to Highest Levels in Almost a Year; 30-Year Fixed Above 3%

Mortgage rates have now increased in six of the last eight weeks. According to Mortgage Bankers Association (MBA) latest weekly survey, average 30 Year Fixed mortgage rates climbed above 3%. The higher rates resulted in refinance activity falling 11% to its lowest levels since December 2020. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.08 percent, with points increasing to 0.46. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) increased to 3.23 percent with points…continue reading →

Housing Supply Shortage Hurts May Home Sales

May ‘20’ is not as encouraging for home purchases as May ‘19’ had been and we needn’t be told the reason for it. Closed transactions dropped by 3.9% compared to April and a mammoth 33.7% on the Year-over-Year chart.  Each housing market in the country has reported an annual drop in double figures (Iowa cutting the best picture with a 14.3% drop while Detroit the sorriest picture with a 64.8% drop). Inventory constraint hasn’t helped one bit. Housing supply in May is lowest since 2008. It has come down by 25% compared to…continue reading →

Ignoring Fed’s Moves, Mortgage Rates Climb to the Highest Levels in Nearly a Year

In 2008 Mortgage Industry largely caused the crisis that led to the Great Recession, in 2020 it's a mere innocent bystander that is getting beat. All kinds of asset markets (Mortgage Bonds, Treasurys, Stocks, even Oil, and Commodities) are in an unprecedented, unchartered territory where the traders have no clue what to do with them. Let's look at some numbers just in the last two weeks: VIX, which measures the volatility in the stock markets, rose from 13 to 75 (100 being the most volatile) The S&P 500 has dropped ~25% Oil prices…continue reading →

Breaking Down the Fed Announcement and its Impact on Mortgage Rates

Federal Reserve cuts rates to zero and launches a massive $700 billion quantitative easing program The Fed on Sunday said it will begin buying $200 billion of mortgage-backed bonds, a move that will stabilize and likely lower mortgage rates, which moved sharply higher last week. Fed also lowered the Funds rate to zero. So, when can you see a 0% rate on the mortgage statement? Probably - never. And that is because the Fed Funds rate has pretty much nothing to do with mortgage rates. This blog that I published last week goes…continue reading →