Why don’t I have the best rate? An amazing blog below from our team preferred lender, Dan Tharp. Enjoy, a very good read. — JaCi Wallace
Without fail, the number one question I get from first-time callers looking to refinance or purchase a new home is “what’s your rate?” I used to stumble a bit when asked this question because there is so much involved in getting an accurate interest rate and one that I can’t answer in a 30-second conversation. I wish it were that easy.
Are mortgage rates going up or down? As a mortgage professional for almost two decades, we have been through many wild rides, but nothing compared to what we are experiencing right now with this coronavirus; or what we are calling our alternative universe. Just over two weeks ago, the fear of COVID-19 sent stocks tumbling, and mortgage rates lower – according to Mortgage News Daily, the average rate for the popular 30-year fixed mortgage fell to 3.23%, an 8-year low.
Rates had been dropping for weeks as “breaking news” seemed to ping our phones by the minute, and fear began to manifest in real-time, as we watched the stock market cradle. In times of economic uncertainty, mortgage rates are typically the beneficiary of bad news, and rates go down as dollars move from the risky stock market and into the “usually” safe haven of mortgage-backed securities (aka mortgage debt) – and rates go lower. Question is, are mortgage rates going up or down?
All eyes will be on the Federal Reserve today and whether short-term interest rates will finally get the boost we’ve all been expecting for years. The government has been tip-toeing around this issue for so long nobody can really predict when it will happen except that it’s got to happen eventually. Interest rates have been suppressed for way too long. I imagine you probably are a little shocked that a Sacramento Realtor would admit this, but it’s true. Mortgage rates have gotta go up.
Initially, yes, it will be put pressure on the entry-level market, but we need a healthy economy. People forget that we have not quite recovered in Sacramento. We still have homes underwater, we still have tons of those loan modifications that are adjusting right now, and many homeowners struggling to make those higher payments may end up doing the short sale they probably should have done years ago.
Some people who bought during 2007 to 2011 and now selling are making a profit, but those from 2004 to 2007 are still hurting.
Part of the opposition to rising interest rates probably stems from a long comfort level. Once you get used to something, it’s hard to remember the way it used to be. Like having to find a public pay phone when you’re out and need to make a call rather than reaching into your pocket to pull out a cell.
I recall in 1995 when my husband and I took out a loan on our previous home and were so thrilled, absolutely tickled pink to obtain a rate of 8%. Far cry from the double digits. I don’t know about you, but less than 1% return on a money market account or a CD is horrible. You may as well pack your mattress with cash, should you have any, that is.
It’s anybody’s guess where the Fed will move short-term rates today. But experts say the prediction is up, and it seems to be more likely now than previously. We are headed toward an economic recovery, and it sure would be nice to get there. On top of this, remember, historically, people still buy homes in Sacramento in spite of higher interest rates.