Mortgage rate update for the week of August 20, 2012

Mortgage rates have been trending higher over the past few weeks (they are still very low).  Here are some of the scheduled economic indicators that may impact mortgage rates this week:

  • Wednesday, August 22: Existing Home Sales and FOMC Minutes
  • Thursday, August 23: Initial Jobless Claims and New Home Sales
  • Friday, August 24: Durable Good Orders

As I write this post (9:00 am PST) the DOW is at a 4.5 year high (13,260). Remember that as the stock markets improve, you will see investors trade the safety of bonds (like mortgage backed securities) for the possibility of higher returns of stocks. This will cause mortgage rates to trend higher as will signs of inflation or that the economy is improving.

Clients often ask me if the government controls mortgage rates and are surprised to learn they do not. The government has been involved with buying mortgage backed securities which is manipulating mortgage rates to lower levels however, they do not directly set mortgage rates. The Fed does set the Fed Funds Rate, which impacts the rates for HELOCs but not mortgage rates. 

Mortgage rates often change throughout the day. Last week, there were days where one of the lenders I work with issued three to five changes in just one day.  

Poll Results: How Would You Like Your Mortgage Originator Compensated?


Our poll is over and I’m actually a little surprised by the results: a majority prefers the current most common form of mortgage originator compensation.

Points, based on a percentage of the loan amount received 48.9% of the vote.   Followed by hourly, based on work performed, at 31.1%.  Paying your mortgage originator a flat fee, the same fee for everyone, came in last at 20%.

I hope the FED and Washington State’s DFI reads this… right now they’re both trying to change how mortgage originators are paid. 

Shouldn’t it be up to the consumer?  They have the right to vote with their feet.  If they don’t like how a mortgage originator feels they should be compensated, they can walk.

Our government getting involved with how an industry is paid is very troubling to me.  

Your thoughts?