More now than in recent years, we are hearing the question: Why are home loan rates rising so much?
The Federal Reserve monitors the U.S. economy and, when necessary, takes steps to address inflationary concerns to avoid economic recession. When the Fed discusses interest rates, it is primarily concerning the Fed Funds Rate, which is the rate banks use when lending money to each other overnight.
Home loan rates, on the other hand, are dictated by the trading of Mortgage Backed Securities (MBS), which are a type of Bond.
At the real heart of home loan rate movement is the dual relationship between Stocks and Bonds, as they compete for the same investment dollars on a daily basis. Inflationary pressures, economic conditions and geopolitical events all influence the direction of both Stocks and Bonds.
When economic reports are weak or disappointing, investors often move their money from riskier investments like Stocks into Bonds, which are considered safer. Since home loan rates are tied to Mortgage Bonds, this helps home loan rates improve.
In contrast, strong economic news often causes investors to move their money into Stocks to take advantage of any gains. This can cause Mortgage Bonds and home loan rates to worsen.
Inflation reduces the value of fixed investments like Bonds. This means that a low inflation environment tends to be good for Mortgage Bonds and home loan rates, while high inflation can cause both to worsen.
Political turmoil or economic crises around the world can also cause investors to move their money into the safety of the Bond markets, helping Mortgage Bonds and home loan rates improve.
If you are second-guessing whether now is a good time to purchase a new home, contact us. We’ll analyze your financial situation together and create a plan that’s right for you. And if you have friends or family members considering a home purchase or refinance, please share our information with them.
Like this:
Like Loading...
Related
Published by Universal Lending Home Loans
Universal Lending Corporation was founded over 40 years ago on the principle that our customers deserve individual and specialized attention throughout the mortgage process. We embrace our passion for customer care, and educate and empower each potential home buyer throughout the entire process, so they make informed, considerate decisions that ensure their home mortgages fit their budgets and keep their families financially secure.
NMLS #2996
Equal Housing Opportunity
6775 E Evans Ave., Denver, CO 80224
(800) 758-4063, Colorado Responsible Party, Colorado Mortgage Company Registration; Arizona Mortgage Banker License #0927881; Florida Mortgage Lender Servicer License #MLD989; Illinois Residential Mortgage Licensee #MB.6760981; Iowa Mortgage Banker License #2006-0305; Kansas Licensed Mortgage Company Kansas Mortgage Company License #MC.0025137; Michigan 1st Mortgage Broker/Lender/Servicer Registrant #FR0019350; Michigan 2nd Mortgage Broker/Lender/Servicer Registrant #SR019351; Minnesota Residential Mortgage Originator License #MN-MO-2996; Montana Mortgage Lender License #2996; Montana Mortgage Broker License #2996; Montana Mortgage Service License #2996; Nebraska Mortgage Banker License #46; New Mexico Mortgage Loan Company License; North Dakota Money Broker License #MB102363; Texas - SML Mortgage Banker Registration; Utah-DRE Mortgage Entity License #7384716; Washington Consumer Loan Company License #CL-2996; Wisconsin Mortgage Banker License #2996BA; Wyoming Mortgage Lender/Broker License #582.
TEXAS MORTGAGE BANKER COMPLAINT NOTICE
CONSUMERS WISHING TO FILE A COMPLAINT AGAINST A MORTGAGE BANKER OR A LICENSED MORTGAGE BANKER RESIDENTIAL MORTGAGE LOAN ORIGINATOR SHOULD COMPLETE AND SEND A COMPLAINT FORM TO THE TEXAS DEPARTMENT OF SAVINGS AND MORTGAGE LENDING, 2601 NORTH LAMAR, SUITE 201, AUSTIN, TEXAS 78705. COMPLAINT FORMS AND INSTRUCTIONS MAY BE OBTAINED FROM THE DEPARTMENT’S WEBSITE AT WWW.SML.TEXAS.GOV. A TOLL-FREE CONSUMER HOTLINE IS AVAILABLE AT 1-877-276-5550.
THE DEPARTMENT MAINTAINS A RECOVERY FUND TO MAKE PAYMENTS OF CERTAIN ACTUAL OUT OF POCKET DAMAGES SUSTAINED BY BORROWERS CAUSED BY ACTS OF LICENSED MORTGAGE BANKER RESIDENTIAL MORTGAGE LOAN ORIGINATORS. A WRITTEN APPLICATION FOR REIMBURSEMENT FROM THE RECOVERY FUND MUST BE FILED WITH AND INVESTIGATED BY THE DEPARTMENT PRIOR TO THE PAYMENT OF A CLAIM. FOR MORE INFORMATION ABOUT THE RECOVERY FUND, PLEASE CONSULT THE DEPARTMENT’S WEB SITE AT WWW.SML.TEXAS.GOV.
View all posts by Universal Lending Home Loans
Principles & Interest 