Mortgage rates could rise earlier than expected

Yesterday the minutes to the December 13, 2012 FOMC Meeting were released catching many off guard revealing the Fed may pull back on the purchase of mortgage backed securities earlier than originally planned.

Here are some bits from the minutes related to mortgage rates:

“While almost all members thought that the asset purchase program begun in September had been effective and supportive of growth, they also generally saw that the benefits of ongoing purchases were uncertain and that the potential costs could rise as the size of the balance sheet increased…

Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet.”

Noting that “several others” of the FOMC are considering to pull back or stop buying mortgage backed securities prior to the end of 2013 caused a major sell off in the bond markets yesterday following the release of the minutes.

Mortgage rates have been at artificially low rates largely due to the Fed’s participation in buying mortgage backed securities (MBS). Should the Fed cease purchasing MBS and treasury securities, many anticipate that “real” mortgage rates would be closer to what we see in the jumbo or non-conforming markets. Currently jumbo rates are at least full point  in rate higher than conforming mortgage rates based on a 30 year fixed.


If you have been considering buying or refinancing your home and benefiting from today’s low rates, I recommend doing so soon.

If your home is located anywhere in Washington state, where I am licensed to originate mortgages, I am happy to help you! Click here for a mortgage rate quote.

The Fed says….Mortgage Rates to Remain Low

2012-08-20-0845This morning FOMC announced no changes to the current Fed Funds rate (this is no surprise). The Fed has decided to keep the Fed Funds rate at 0 – 0.25% until the unemployment rate is under 6.5%.  This may be some good news to home owners who have HELOCs as many of them have rates tied to the prime rate, which is based on the Fed Funds rate.

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Mortgage rate update the week of October 22, 2012

Although it may appear that this week doesn’t have a lot going on when you review the scheduled economic reports to be released, don’t that trick you. Tomorrow we’ll hear from the Fed and while we do not expect any changes to the Fed Funds interest rate, investors will be paying close attention to the Fed’s announcement.

Mortgage rates are not only impacted by scheduled economic indicators and the Fed’s continued purchase of mortgage backed securities. This morning, as I write this post (8:00 am pst), the DOW is down 235, due to poor corporate earnings and renewed worries about Spain. When stock markets are taking a hit, traders will often seek the safety of bonds, like mortgage backed securities. 

Here are some of the economic indicators scheduled to be released this week:

Wednesday, October 24: FOMC Meeting and New Home Sales

Thursday, October 25: Initial Jobless Claims; Durable Goods Orders and Pending Home Sales

Friday, October 26: Gross Domestic Product (GDP); GDP Chain Deflator and Consumer Sentiment (UoM)

Next week, just before the election, we’ll have the Jobs Report.

Mortgage rates remain at very low levels. If you’ve been considering buying a home or an investment property, you may be surprised how affordable today’s mortgage payment may be. If you’re interested buying a home or refinancing your mortgage on your home located anywhere in Washington state, I’m happy to help you. Click here for a free mortgage rate quote for your Washington home.

Mortgage rate update for the week of September 17, 2012

Last week the Fed announced they’re stepping up their purchase of mortgage backed securities to help keep mortgage rates low. While they are doing this, the FHFA (oversees Fannie Mae and Freddie Mac) is increasing the cost of conforming mortgages by increasing the “g-fees”. I’m seeing banks and lenders increasing rates from 0.25 to 0.50 in fee (the cost for a certain rate) and up to 0.625% more with extension fees (when your loan does not close in time). 

My advice with mortgage rates tends to be that if you like the rate, you should consider locking it. When it comes to locking rates, do a “gut check”. If you’re more uncomfortable with having a certain rate secured (locked) while rates may improve or if you can stomach not being locked and having mortgage rates increase. 

Here is a list of some of the economic indicators scheduled to be released this week:

Monday, Sept. 17: Empire State Index

Wednesday, Sept 19: Building Permits, Housing Starts and Existing Home Sales

Friday, Sept. 21: Initial Jobless Claims and Philadelphia Fed Index

As I write this post (9/17/12 at 8:45am PST) I’m quoting 3.500% for a 30 year fixed based on a loan amount of $400,000 with a sales price of $500,000 (80% loan to value). Seattle area home buyer has credit scores of 740 or higher and the purchase is closing by October 25, 2012. (apr 3.566) with closing cost estimated at $3525 and a principal and interest payment of $1,166.67 (taxes and insurance are not waived).

If you would like me to provide you with a mortgage rate quote on a home located anywhere in Washington, please contact me.