Most Mortgage Rate Headlines Are Wrong Today
Thu, 06 Aug 2020 21:25:45 GMT
There are quite a few more new stories than normal about mortgage rates today. Most of them are wrong. This one is not, and it's pretty easy to see why. Freddie Mac releases its weekly mortgage rate survey every Thursday morning. The survey accepts responses from Monday through Wednesday, but based on a comparison of day-to-day rates versus the survey numbers, it would appear Monday's rates get most of the weight, Tuesday's slightly less, and Wednesday's almost none. In other words, the survey has historically compared Mon/Tue rates to Mon/Tue rates. That's not a problem if that was made more clear by the throng of journalists that cite the survey as the definitive word in week-over-week rate movement. As it stands, however, we have headlines unequivocally proclaiming mortgage rates are at ...read more
Rates End 6-Day Streak at Record Lows
Wed, 05 Aug 2020 22:00:00 GMT
Mortgage rates cooled off today, rising for the first time since July 27th for the average lender. Between now and then we've seen a string of what have mostly been new record lows with top tier 30yr fixed offerings well under 3%. For more on what constitutes a "top tier scenario," check out yesterday's explainer . It's an interesting time for rates. We've seen record lows before, but we haven't seen this combination of staying power at those lows coupled with the expectation for additional improvements in the future. In other words, it was pretty logical for rates to drop quickly in response to covid-related realities and it would be pretty logical for rates to remain in this territory (or better) as long as those realities persist. Be careful with that logic though... While the Fed continues ...read more
New Mortgage Rate Record; What Is a "Top Tier" Scenario?
Tue, 04 Aug 2020 21:20:43 GMT
Mortgage rates are on a tear, with the average lender easily hitting new all-time lows today. How low is that? At this point it's safe to say that anything over 3% is too high as long as we're talking about a top tier scenario. So let's take a moment to discuss what might separate one scenario from another. 1. Loan-to-Value ratio (LTV) As the name implies, it's the ratio of the proposed new loan amount to the value of the home in question (note that the purchase price is used if it's lower than the appraised value). This one of the two most important considerations that determines the pricing bracket your loan quote would fall into. By the time you get an LTV down under 75%, you're paying almost no additional interest, but there's a very important caveat. 2. Credit Score (FICO) This is the ...read more
Should You Wait For Lower Rates?
Fri, 31 Jul 2020 21:10:42 GMT
Mortgage rates have fallen more aggressively than ever and they've been remarkably willing to set record after record. So is there any reason you shouldn't wait for them to go even lower? This is an age old question any time rates fall to long-term lows. In the past, the answer has been pretty easy . If rates had fallen more than 1.5% from their previous high over the course of several years, and if something obvious happened to push them just a bit lower, it was time to refi! For example, the Fed's policy shift (in favor of mortgages) in September 2012 and the Brexit vote in 2016 both pushed rates quickly lower. Both were singular events with finite information, that allowed markets to react and move on. Coronavirus has filled this role in a different way. Like past events, it hit a market ...read more
Mortgage Rates Fall Nicely, But The Going Gets Tougher From Here
Wed, 29 Jul 2020 20:55:14 GMT
Mortgage rates improved nicely overnight. The average lender's morning rates were very close to the lowest levels ever . This was a distinct possibility based on yesterday afternoon's bond market movement. Mortgage rates are most directly influenced by mortgage-backed bonds which trade thousands of times a day. It's not feasible for mortgage lenders to change rate quotes that frequently. Instead, they wait for the market to move by a certain amount before making any changes. By yesterday afternoon, we'd clearly seen enough movement as several lenders had already updated rates for the better. For others, however, it was too late in the day, thus leaving the market improvements to be priced into this morning's rate sheet offerings. The only risk to that gameplan was that bonds could move enough ...read more