-
News You Can Use
“What are rates going to do?” That’s a question I hear as often as weathermen are asked for their predictions. Just like meteorologists try to predict the next snowmageddon, I read the economic tea leaves and get a sense of where rates are heading. Sometimes there are surprises like 2009’s Black Wednesday – but for the most part, lenders have a good idea of what’s on the horizon. Let’s start with a quick lesson in mortgage rates:Rates are determined largely on the trading of Mortgage Backed Securities (MBS). In a ‘normal’ market and in simplest terms, bad economic data helps rates. The cause of these record low rates is that the Federal Reserve entered the MBS market en force in November 2008. This sent 30 year rates hurdling downward towards 5% – sometimes even below it. And ARM rates, fuhgeddaboudit it – in the 3s? Wow.
Alas, all good things must come to an end. The Fed announced a few weeks back that they will wrap up their MBS purchase program at the end of the month. After March 31st, we’re on our own folks. We’ll return to the normal MBS influencers – domestic factors – economic, social political indicators – and yes, even global news weighs in. Many estimate that once the market returns to normal (i.e. unsupported by the Fed), rates will rise .75-1% from where they are now.
So when people ask ‘what are rates going to do in three to six months from now?’ my response is usually, ‘I wish I had a magic eight ball’ or ‘If I knew I’d be managing a hedge fund’. But for 2010 I know what mortgage rates will do, they will go up. What I do know is even when that does happen, homes will still be very affordable as will rates and the opportunities for buyers are there for the taking.
Featured Loan Program
Good Neighbor Next Door
This specialized FHA program allows teachers and first responders to purchase a home with a substantial incentive in the form of a discount of 50% off the list price of the home.- Eligible borrowers are law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians
- Borrower must commit to live in the home for 36 months
- Eligible Single Family homes are located in designated revitalization areas
Have You Heard?
Did you know Charlotte has a new local live show featuring entertainment & information on health, food, fashion, finance, pets, fitness & more? Charlotte Today airs on WCNC-TV weekdays at 11am featuring Colleen Odegaard as its vivacious host. If you can’t catch it live, it is certainly a show you should add to your TiVo to-do list!Enjoy this info? Would you like to receive Monday Money Matters in your inbox? Subscribe here!