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Why Can Mortgage Rates Rise in a Down Market?
from:With all the hoopla about the overload of inventory in most states (due to foreclosures), and the dropping of interest rates by the Federal Reserve, you may be wondering why mortgage rates haven risen in the past year over all. The mortgage industry is not the same as the banking and the housing industry. They are connected to these two sectors of the market, but lending products are usually priced on their own merits and not just those of the economy.
The Lender’s Point of View
So, while the amount of inventory can affect home prices and spur competition amongst lenders, it can lower the rates if one lender is trying to grab a bit more business. On the other hand, the mortgage crisis has been so severe in some states that many lenders are wary of lending to unreliable borrowers. They have tightened their credit requirements and when you don’t meet those newer requirements, they may raise the rate to hedge their risk. So, even with a market rate of 6.00% on a 30-year fixed rate mortgage, you could still end up paying more if you don’t meet the new credit requirements of a FICO score of 720 or more, solid employment, and a sizable down payment.
The Market’s Point of View
Mortgage rates can also increase, even if the Federal Reserve decides to lower interest rates. This may spur banks to lend out more money and attract more customers. As the new customers start to flood the market, the demand increases. When the demand of any product goes up, so does the price. That’s why the mortgage rates can even increase when the Federal Reserve cuts rates.
Your Point of View
It is very difficult to time to buy a house at the bottom of mortgage rate drop cycles. Typically, you can do this better if you are refinancing than if you are buying because you are then comparing your new loan to whatever you had before. If it saves you money or drops by at least 1 to 2 points of your mortgage interest, then you are pretty confident that buying at that time is a good move. Otherwise, if you are new buyer and have nothing to compare it to, you still can be relatively comforted by the fact that despite rises and falls over the short-term, mortgage rates are at a historically low-point for now in comparison to years past. They may not drop more than 1 point more and should they do so, you can always refinance your mortgage rates later.
Mortgage Missouri News
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The Truth About Mortgage Refinancing Revealed by Kansas and Missouri Mortgage ... SBWire (press release) Kansas and Missouri based Mortgage Broker Kenneth Stone reveals mortgage refinancing secrets at a new web site that is full of free reports, a home buying guide and free mortgage calculators. The site is designed to give Kansas and Missouri residents ... |
Hawaii Woman Sentenced in Foreclosure Rescue Scam Involving Approximately 80 ... - LoanSafe
Hawaii Woman Sentenced in Foreclosure Rescue Scam Involving Approximately 80 ... LoanSafe LOUIS, MO—Marien Brown was sentenced to 18 months in prison and ordered to pay approximately $250000 restitution for falsely representing that she operated a “mortgage rescue” or “foreclosure rescue” service. According to court documents, Marien Brown ... |
Bank Star Mortgage Moves HQ to Des Peres - STLtoday.com
Bank Star Mortgage Moves HQ to Des Peres STLtoday.com Ward, a 14-year veteran in the mortgage lending business, joined Bank Star after serving as assistant vice president/market manager for PNC Bank. He attended Community College at Meramec and Florissant Valley. A resident of O'Fallon (MO), Ward had been ... |
Business Bulletin Board - STLtoday.com
Business Bulletin Board STLtoday.com Clean, formerly Clean the Uniform Co., received a 2011 Silver Award for outstanding practices in wastewater pretreatment from the Missouri Water and Environmental Association. Murphy Co. received a 2011 Safety Award from the American Subcontractors ... |
Missouri Among States Spending Mortgage Settlement On Other Priorities - KCUR
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