Mortgage Rates

Market Update: More Inventory Available

In the last month we have seen the housing market start shifting and we are seeing early signs of the market cooling off. People keep asking if the market is going to crash, and I don’t think it’s going to. It feels like the we have hit a plateau in pricing and that the market is beginning to soften. We are still very much in a seller’s market, but we are seeing the market start shift and make strides towards a different environment, one that puts an ease on purchasing. With more inventory becoming available on the market in the last month there is now twice as many homes for sell! As you can see from the chart at this time last year there was only about 2,700 active listing available for purchase. At the end of May this year we had over 5,000 active listings. This means purchasing today may be easier than it was at this time last year. There are twice as many homes to choose from, which means more opportunities for buyers to purchase! I spoke with a realtor recently who had two listings that lasted on market for 13 days, which is twice as long as the usual turn time we have been seeing the last two years. When they did finally receive offers for these listings each home only got one offer each. Interestingly enough each offer was still above list price. All of this together is equating to a calmer market for buyers to compete in. There are more options today, which means it could be much easier to go under contract. Although it may feel like a challenging time to purchase, it’s not impossible. This increase in inventory has already brought a positive shift to the market and eased some of the heat from the overwhelming seller’s market buyers have been caught in the last few years. If you got demotivated last year because you couldn't find anything you liked, there is more inventory available today giving you the opportunity to find exactly what you are looking for. We always say the right house comes along at the right time and this increase in available inventory could be the moment you’ve been waiting for!

Lock & Shop Options – Helping Offset Rising Rates

It’s no secret we are living in a rising interest rate environment. And with it comes uncertainty and a tricky market that makes purchasing a new home or investment property a bit more of a challenge. We are now offering a brand new, innovative program called Lock-and-Shop. This awesome program is a helpful tool that allows you to lock in an interest rate before you find a home, giving you a huge advantage in the current market - TIME. With a limited supply of homes for sale, it may take you longer to find a home you’d like to purchase. It could be a few months between your pre-approval and you going under contract. During this time interest rates have the potential to rise to the point where you no longer qualify for a mortgage, or you can’t afford a home in your price range. Any increase in your debt load or mortgage payment could prevent you from qualifying. That’s why this program is amazing because it allows you stay qualified while you shop for a home. So how does it work exactly? We lock in your interest rate for 120 days even though you have not found a house. The best part is this program comes at no extra cost to you! However, there is a change depending on how long you’d like to lock for. Let’s say a 30-day lock has an interest rate of 5.25%, then a 120-day lock may have an interest rate of 5.5%. When you do find a house if rates are higher good for you, you’re already locked in at a lower interest rate. However, if rates go lower, we do offer an option where we may be able to negotiate a float down to the current market rate. We’ve been seeing a lot of success with this program. Back in February we locked rates for five buyers who were actively looking but hadn’t found the home they wanted to purchase yet. Three of them just went under contract last week and we were able to use a previously locked-in interest rate, that was a full percentage point lower than today’s market rate. Saving them about $400 a month on their mortgage payment! Plus, if you have been considering building a house this program is perfect for you too. Due to rate increases thousands of people who began building a house last fall no longer qualify. They have not only lost their construction deposit, but time they could have been in another house. So, in addition to free 120 day locks we also offer 180, 270, and 360 day locks. (However, these longer locks do require a 1% deposit which will be refunded when you close on your house). If you know anyone who started building a house but then couldn’t qualify or if you have been thinking about building your dream home but don't want to risk interest rates going up, then let’s look at using this program for you. We can lock in your interest rate today for up to 360 days giving you the peace of mind to build, know what your interest rate and payment will be once complete, and know that you will qualify for the loan once the house is built. The Lock-and-Shop program can give you an exceptional opportunity in this market. So if you are serious about purchasing this year and think this program could benefit your situation, give me a call and let’s talk about getting you locked in a rate today.

Fed Hikes and Mortgage Rates Explained

How will the Fed’s recently announced quarter point hike to the Fed Funds Rate affect mortgage rates?  The answer may surprise you. The Fed Funds Rate is not the same as a mortgage rate because it can change from one day to another, while mortgage rates can be in effect for 30 years. Mortgage rates are primarily driven by inflation, which erodes the buying power of the fixed return that a mortgage holder receives.  When inflation rises, lenders demand a higher interest rate to offset the more rapid erosion of their buying power. You probably know that inflation has been rising of late, and as a result, so have mortgage rates. When the Fed hikes rates, they are trying to slow the economy and curb inflation. If successful in cooling inflation, mortgage rates will decline.  History proves this during rate hike cycles for the past 50 years. However, the Fed may also reduce its holdings of Mortgage Bonds, which can cause some interest rate volatility.  I’m here to help you navigate through these uncertain times and find you the best opportunities for a purchase or refinance.

Act Now Before the Fed Begins Tapering

There’s a lot of talk about the Federal Reserve cutting back their buying of mortgage bonds, which is known as tapering. The purchases of mortgage bonds have helped keep interest rates low.

This can be very important to you if you are considering purchasing a home or looking to refinance your current mortgage to save money.

Interest rates are still extremely favorable. But this week at their meeting, the Fed said that they will likely begin reducing their purchases of mortgage-backed securities by the end of this year, with an official announcement likely on November 3. This could begin to raise interest rates as early as next year.

Once the Fed starts to pull back on their purchases, there is a risk that interest rates may move up, which makes this a great time to take advantage of low rates.

If you would like to take advantage of the low rates, while they are still available, to refinance here are some steps to follow:

Step 1: Set a clear goal and reason to refinance. From cutting your monthly payment, to shortening the term of your loan or pulling out equity for home repairs or paying off high interest debt. There are plenty of reasons why it’s smart to refinance now. You’ll want to clearly identify yours.

Step 2: Check your credit score. You’ll need to qualify for a refinance just as you needed to be approved for your original home loan. The higher your credit score, the lower your refinance rate will be.

Step 3: Determine how much home equity you have. To find how much equity you have acquired, check your mortgage statement to see your current balance. Then, give us a call so we can run an analysis to find the current estimated value of your home. Your home equity is the difference between the two. For example, if you owe $250,000 on your home, and its value is $325,000, your home equity totals $75,000.

Step 4: Get your paperwork in order. Gather recent pay stubs, federal tax returns, bank statements and anything else your mortgage lender requests. They may also look at your credit and net worth, so disclose your assets and liabilities upfront.

If you haven’t locked in a low rate, NOW IS THE TIME.

Give us a call today and let’s review your situation so you can capitalize on the market before it begins to move.


What Will Happen When The Fed’s Raise Interest Rates?

We fully expect the Fed’s to raise the Federal Funds Rate 0.25% at either their October 28th meeting or December 16th meeting. This is both good and bad for mortgage rates. The federal funds rate is the interest rate at which depository institutions actively trade balances held at the Federal Reserve—called federal funds—with each other. That's the technical definition — but simply put, it's the interest rate charged by commercial banks to other banks who are borrowing money, usually overnight. Banks use the Fed funds rate to base all other short-term interest rates such as interest rates paid on deposits, bank loans, credit cards, and adjustable-rate mortgages. How it relates to long term 30 year fixed Mortgage Rates is tricky. The Fed’s raising the Fed Funds Rate signals to us that the end of ultra-low interest rates is upon us. And we will be entering an environment of both a stronger economy and raising interest rates. A 1/4 point increase in the Fed funds rate could slow growth and prompt a decline in the stock markets. Money flowing out of the stock market will flow into the bond market creating more demand for mortgage bonds and thus lower interest rates.chart

The targets for appropriate federal funds rates by FOMC participants is plotted in a chart that has come to be known as the "dot plot." - Sept 17th “dot plot”

Regarding when the FED will raise rates, Fed Chair Janet Yellen said at her Sept 17th Fed Meeting “Inflation continues to run below target;” “International development will continue to exert downward pressure on inflation;” “A rate hike will come from further improvement in the labor market and when we are confident that inflation will return to 2%.” We predict in the short term interest rates to Roller Coaster. Even at times going lower than where they are at today and other times raising 0.25% to 0.375% very quickly, maybe even in a matter of days. In the next 90 days we expect a lot of volatility in the bond markets, stock markets, and oil markets. We expect the longer term trend of higher mortgage rates.      

Today’s Rates 7-31-2015

Today's Rates Look Great! Click on the image below to get a customized Rate Chart. Hurry before the FEDS Raise Rates. Untitled-1

30 Year Mortgage Rates as Low as [shortcode_magic id="2557"]

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John Mitchell, Salt Lake City Utah


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headshot“Thank you. Out of all the mortgage people that I spoke with you were the most personable. Thanks for helping with my refinance”

Joee Lancaster, West Jordan Utah

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“Anthony got us a better rate than we could find anywhere else. He even reduced our closing costs by over 1/3! It was our best mortgage experience”

Donovan Gross, Salt Lake City Utah

Mortgage rates are once again at record lows - Call 801-206-4343 before it is too late

Anthony VanDyke
Utah Mortgage Rate Specialist

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15 Year Mortgages On Sale

You may be one of the many people rush around on Black Friday every year to take advantage of specials on some gifts and electronics. While that can save you a few dollars, if you’re a homeowner, or buying a home, you should be aware of one of the great bargains available today. That is the current interest rate on 15-year fixed mortgages. Understanding the Value of Historically Low Rates Mortgage lenders traditionally price the rates for 15-year conventional mortgages at around .5% below the rate for 30-year loans, as they present a lower risk. However, we are now seeing a situation today where the shorter-period loan has an unusually high differential of .76% Anyone who understands the time value of money will appreciate just how much difference such a seemingly small amount in your interest rate makes over the life of a mortgage. For example, if you take out a $200,000 conventional fixed mortgage today for 30 years at the prevailing 3.75%, you will pay $926 a month in principle and interest. However, the same $200,000 on a 15-year fixed mortgage is available for only 2.99%. This would mean you have a monthly principle and interest payment of $1,380. That small increase in your payment has very significant meaning to you as a homeowner. Instead of paying nearly double for your home over the 30 years, or $133,433 in interest, you only pay a total of $48,436 in interest on the 15-year home loan. Doing the Numbers If you’re a savvy shopper and always look for the best discounts, these numbers are worth understanding fully. For example, the $85,000 you save in real interest costs means you are effectively saving more than $472 a month if you spread that savings over the 15 year period. That alone is more than the increased monthly payment, so you can look at it as a form of tax-advantaged savings. However, the advantages go far beyond this significant amount of savings on interest paid. A major factor is the ability to totally pay off your home 15 years early. Stop and consider what your retirement fund would look like if you continued to make that mortgage payment to yourself over the next 15 years. At even a conservative rate of return of 6%, that would accumulate to more than $400,000, twice the original amount of your mortgage! Plus, your home is paid off, meaning that instead of making a payment for 30 years to pay off your $200,000 mortgage (and giving your banker $133,000), you end up with a debt-free home (at its increased value) plus $400,000 in your retirement account. In just about anyone’s book, that is called a big win-win scenario. Even if you’re currently paying on a current longer-term mortgage, we can help you evaluate the economics of refinancing to take advantage of these unprecedented rates. Of course, rates change daily, and, like your favorite shopping time, it’s important to take advantage of these bargains while they’re still available. Call Anthony VanDyke today and we’ll respond promptly to any of your questions. You can reach us at 801-206-4343 and we can help you take advantage of a great rate on your own 15-year mortgage. Don’t miss out on what this will mean to your financial status today and in the future.  

Obama Lowers FHA Mortgage Insurance by 0.5%

obama fhaIf you were afraid that you had been left out of the housing market, your situation may have been changed dramatically with President Barack Obama's announcement Jan. 8 in Phoenix of a 1/2 percentage point reduction in the premium new borrowers pay for FHA mortgage insurance. This is exciting news for anyone who has been contemplating purchase of a new home. Effectively, it means that buying power has been increased substantially, the average buyer's payment will be reduced by about $90 a month. In practice, a buyer who previously qualified for a $200,000 loan could now be approved for a $220,000 mortgage, for the same payment. It is also good news for those who entered into a loan during the past three years. Refinancing now with the new rate would result in a savings of more than $1,000 a year. The new premium rate will become effective towards the end of January. The action reflects a healthier U.S. housing market, in addition to the improved condition of the FHA single family mortgage insurance fund, which has increased in value by $21 billion over the past two years. Castro noted in his announcement that this reduction in rate is a "prudent measure" that will keep the FHA on a "positive financial trajectory." The rates were initially increased in 2009 in response to the country's severe housing crisis, action taken in an effort to stabilize the MMI Fund. Observers had previously predicted that the president would recommend lowering FHA premiums. The Obama administration has reportedly been seeking a way to jump-start the U.S. housing market once again, even considering moves that would sidestep Congress. Whether this is the only such action to be taken remains to be seen. This week's action is expected to allow more than two million Americans to realize the dream of affordable home ownership over the next three years. While the whole subject of home pricing, mortgage lending and recovery after the housing bubble burst is complicated, this is seen as a positive move, particularly in areas like Phoenix which have yet to regain the robust values and sales records of the past. Traditional housing market rebounds have signaled economic recovery; that has not occurred during this downturn and it is hoped that this action will help to spur a renewed interest in home ownership, and lead to a new home buying surge. If you have any questions about what this means to you as a prospective buyer, or if you have an existing loan that might benefit from refinancing, contact me at your earliest convenience to discuss the options. More details will become available in the coming weeks, but as a professional mortgage loan officer specializing in FHA financing, I have my eyes on the pulse of the market and will be happy to discuss possibilities with you.