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Mortgage Rates Report

Well, of course the age-old question in the mortgage business is . . . which way are interest rates going? During the summer months of home-buying season, it becomes an even more frequently asked question. Unfortunately, it's not a question that can be answered with any more assurance than slight. However, you might find some thoughts regarding interest rates to be worth considering.

The most important thing driving rates is inflation, or worries thereof. If inflation is suspected (typically indicated by strong economic numbers, comments of concern by the Fed., pressure on prices, etc.) long-term mortgage rates go up. The way the consumer can follow this is to watch the yield on the 10-year Treasury bill . . . i.e. so goes yield, so goes mortgage rates. Conversely, if the economy seems to be weakening, and yields on bonds go down, mortgage rates will follow suit. So, a strong economy is bad for mortgage rates, and a weaker economy is good for rates.

Also of note is the fact that the Fed raising short term lending rates doesn't necessarily affect mortgage rates at all. Actually, it can possibly help them come down! So, don't panic when you hear that prime rate just went up, unless of course you have an equity line of credit or other consumer type credit.

Finally, a lot of times, rate changes don’t affect your monthly payment nearly as much as you would think. Every increase or decrease of 1/8 percent in mortgage rates only changes your payment by 8 cents per thousand financed. For instance, if rates go up from 6.25% to 6.375% and you are borrowing $200,000, the increase only makes a $16 per month difference in payment.

To talk with one of our mortgage specialists about current mortgage rates and how they effect your summer home buying, give us a call (800-823-1727) or email. We would love to hear from you!