9/15/20 Mortgage News Daily “What Will The Fed Do to Mortgage Rates?”
What will the Fed do to mortgage rates? This is actually a bit of a trick question. The Fed doesn’t set mortgage rates. The Fed’s policy rate applies to overnight loans between large financial institutions. The only way it directly influences mortgage rates is by serving as the basis for the PRIME rate. Home equity lines of credit (HELOCs) are often based on the Prime Rate.
For all other mortgage rates, charting a connection to the Fed Funds Rate is significantly more challenging. Indeed, there are many examples of mortgage rates moving in the opposite direction. In other words, mortgage rates have often fallen after a Fed rate hike and vice versa.
9/16/20 Bankrate.com “Will changes at Fannie Mae and Freddie Mac mean higher mortgage rates?” Peter G. Miller
Since 2008, the federal government has taken more than $100 billion from Freddie Mac and Fannie Mae, the government-sponsored enterprises, or GSEs, that buy most mortgages in the U.S. and package them for sale to investors.
That money came from mortgage borrowers, but no one ever got a direct bill. Instead, the fees were buried in mortgage interest rates, rates that might increase significantly as Washington wrestles with the question of what to do with Fannie Mae, Freddie Mac and the billions of dollars in profits they generate, most of which goes into the treasury after the government took an 80 percent stake in the companies to avert an even wider financial crisis more than a decade ago.
The way Fannie Mae and Freddie Mac are financed – and the way the government gets a piece of the action – bubbled to the surface a few weeks ago. In August, Fannie and Freddie announced that refinancing borrowers would have to pay a new charge, a 0.5 percent “adverse market refinance” fee starting Sept. 1. Whether you were looking for a cash-out refinance or a simple rate-and-term refinance, you would pay more at closing.
For example, with a $190,000 loan, the new fee was set to be an extra $950. This fee would be paid by lenders to Fannie Mae and Freddie Mac. Then, to get their money back, lenders would increase the interest rates they quoted to borrowers by one-eighth (.125) to one-quarter (.25) of a percent. In the end, borrowers would absorb the fee through higher mortgage rates.
Adverse market fee surprises borrowers, lenders
The new adverse market refinance fee produced an instant result: mortgage rates rose. Not just rates for refinancing, but rates for purchase money mortgages as well.
Real estate organizations, lenders and borrowers cried foul. There was not enough notice for the new fee, they said. Many pending applications would fall through.
9/17/20 FOX Business “Should you lock or float your mortgage rate today?” Lauren Bowling
The decision each buyer makes before the closing.
If you’re in the market for a new mortgage (either buying your first home or investigating mortgage refinance options), you’re likely checking mortgage rates on a weekly basis.
Currently, a 30-year fixed mortgage is at 2.93 percent (as of Sept. 3, 2020) — 0.56% lower than interest rates a year ago in September 2019. It is hard to imagine interest rates getting any lower, but many analysts are predicting a further decline.
From an interest rate perspective, this is a very exciting time. Those interested in seeing how rate fluctuations impact their own financial decisions should compare lenders and mortgage rates.
HOW TO FIND THE BEST MORTGAGE RATES RIGHT NOW
Most lenders provide a rate lock letter with the preapproval that lasts anywhere from 30 to 90 days. Lenders can extend a rate lock, or provide a lengthier one at the start, but these options cost money for borrowers, so be sure to run through all the considerations of your personal situation before making a decision.
For example, a homeowner sees an interest rate from a lender for a $400,000 mortgage at 3.25% but doesn’t lock in the rate. Thirty days later, he’s ready to buy a home, but interest rates went up to 3.45%. At the higher interest rate, the borrower pays $40 more per month and close to $16,000 over the life of a standard 30-year fixed-rate loan.
When should I lock my mortgage rate?
“Locking” in the rate is good during fluctuating interest rate environments because it provides peace of mind, keeps your interest rate low, and protects against any rate increases. This means borrowers can shop for a home (or a refinance) and be certain their borrowing power won’t change when the market does.
Also, since interest rates are currently at historical lows, it’s hard to imagine a scenario where rates could go even lower than they are now. If you’re already shopping for homes and certain you’ll be making a move in the next 30 to 60 days, locking in the rate is a good idea to ensure the one you’ve qualified for stays put.
If you’re looking to secure a low rate today, then visit Credible to see what mortgage lenders are currently offering and what kind of rates you’d qualify for with your current financial situation.
The above article,“ Headline Real Estate News”, was prepared by David Fialk, Realtor Emeritus, and regularly posts real estate articles of interest for home buyers, home sellers and home owners.
Licensed Since 1971, David Fialk is Licensed Real Estate Broker Salesperson in North Carolina (Intracoastal Realty, Wilmington 28411) & New Jersey (Coldwell Banker Residential Brokerage, Metuchen 08840) and has helped more than 1800 Families Move across Town… Throughout the State… and Across the Country!
Planning on purchasing real estate? Thinking of selling your home? For real estate information ”You Can Rely On, Contact the REALTOR You Can Rely On”.
David can be reached via email or by phone at 910-859-0200 or at www.DavidFialk.com.