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

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

Market Update: Consumers Upbeat

Today’s consumer is feeling upbeat about the economy.  Consumer sentiment surged to 98.2, above the 94.1 that was expected.  This lofty level has not been seen since January 2004 and stocks soared on the news.

A spokesman from the survey said, “More consumers spontaneously cited increases in their household incomes in early January than any time in the past decade, and more households reported unprompted references to favorable employment prospects as well as lower prices than at any other time … Continue reading

Mortgage Rates Edge Higher

Mortgage rates rose slightly last week.  Both mortgage rates and the mortgage bond market recently have been at the best levels since 12 months ago.

The Freddie Mac average for a 30-year conventional fixed rate mortgage rate rose last week to 4.14% nationally, climbing 2 basis points. Lenders report charging 0.5% discount points (percent of the loan amount ) to secure this rate.

Freddie Mac publishes its Primary Mortgage Market Survey (PMMS)  every Thursday and it is a backward looking … 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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