Brexit and Mortgage Rates

Brexit happened and mortgage Bonds, thus mortgage rates, reacted delivering a great opportunity to homeowners and homebuyers. But what the heck is Brexit and what does it have to do with mortgage rates?

What is Brexit?

Brexit is a term coined from the withdrawal of Britain from the European Union – the British Exit. The people voted last night and the expectation was Britain would remain in the EU. Surprise, surprise…instead, the British walked out, withdrew from the union and … Continue reading

Mortgage Rates and the Federal Reserve

Mortgage rates are often thought to be directly linked to the Federal Reserve.  It’s common for many people to mistakenly think The Federal Reserve actually sets mortgage interest rates.  The media contributes to this misunderstanding.  But it is incorrect.  Mortgage rates are based on the pricing of mortgage bonds which are collateralized by mortgages, known as mortgage-backed securities.

The Federal Reserve

The Federal Reserve sets the Fed Funds Rate (FFR). The Fed Funds Rate is a short-term overnight rate banks charge … Continue reading

What the Fed Rate Hike Means for Mortgage Rates

Higher interest rates are here. After a year plus of chatter, the Federal Reserve hiked the Federal Funds Rate yesterday. This was the first rate hike since June 29, 2006 – nearly a decade ago.

The Fed Funds Rate has remained at -0- to 0.25% since December, 2008 when the Fed slashed rates in an attempt to stimulate the economy and boost the housing market. Now, the Fed is unanimous in believing the economy is strong enough to support the … Continue reading

Mortgage Market Recap

The mortgage market has been volatile lately and continues to move lower, pushing home loan rates higher.   Losing over 100 basis points since Monday’s open, which translates to an increase in home loan rates of approximately 0.25%.

In the past month, mortgage bonds have worsened by over 200 basis points, which means approximately half a point in mortgage interest rates.  This could affect the buying power of home buyers who have been pre-qualified or pre-approved at a lower interest … Continue reading

Lock or Float Your Mortgage Rate?

Mortgage interest rates are typically a hot topic for consumers in the home buying process.  In fact, it is often the first question asked of a mortgage professional without consideration of market activity and the discussion of lock versus float.  Even more often the mortgage rate is the only decision factor a consumer uses when choosing their home financing lender.

There are other questions and considerations a consumer should be exploring…but that’s another discussion!

Mortgage rates are tied to mortgage … Continue reading

6 Factors That Influence Mortgage Rates

Mortgage interest rates fluctuate constantly and often with incredible volatility.  Consumers typically misunderstand what causes mortgage rates to change.   Most think it is the actions of the Federal Reserve and its monetary policy.   However, mortgage rates are derived from the buying and selling of mortgage-backed securities which move constantly.  This movement is influenced by six factors of which the Federal Reserve typically plays a minor role.

Mortgage rates are an outcome of the activity of mortgage-backed securities in … Continue reading

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