How Mortgage Rates Change

Minneapolis, MN:  Many people believe that if you call around to enough lenders, that you will find someone offering a great deal.  The reality is that it doesn’t really work that way.  We generally say that if you call around to enough lenders, you might find the biggest liar.

Are All Lender Essentially The Same?

First understand that for all your traditional loans; FHA, VA, Fannie Mae, and Freddie Mac loans, which encompass the vast majority of all mortgage loans done in this county, every mortgage lender follows the same rules, have the same underlying costs, and set rates based on the same thing.  If my rates go up, so do theirs.  If my rates go down, so do theirs.

worth_balanceEver notice that most of the time, when purchasing the same item at Target or Walmart, the price is virtually the same thing.  Maybe just a tiny difference?  The same thing goes with mortgage loans.

Are there minor differences in mortgage companies rate?  Yes, but generally, the difference between the best and the worst on any given day is about .25%, and really only has to do with overhead, not one being able to really offer something better.

If my cost is the same as their costs, but they have to pay for advertising on all TV channels, radio stations, and all over the Internet.  If they have to pay for stadium sponsorships, and the brink and mortar buildings on every corner, but I don’t… Who do you think can then offer better deals?  Yes, it is that simple.

So What Changes Mortgage Rates

Long term fixed rate loans, like Conventional fixed rate loans and Government back VA Loans and FHA Loan lenders all set their rates based on the pricing of Mortgage Backed Securities.  These mortgage bonds are traded in real time, all day in the bond market.

This means rates or loan fees (mortgage pricing) moves constantly throughout the day, being affected by a variety of economic or political events.  The bond market most days trades in a small zone. So the mortgage rate the lender sets in the morning, is usually good all day long.  But sometimes, the bond market has bigger changes though out the day, meaning a mortgage lender could potentially change rates during the day, sometimes even multiple times in one day.

This can be very frustrating for mortgage shoppers.  You call this morning to get a mortgage quote. Quote in have, you talk to your spouse about it, calling back in the afternoon, just to get a different quote.  Sometimes this change is in your favor.  Sometime it is not.

Therefore tracking these securities in real-time is critical. When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up. Click this link to track our live mortgage rates for MN, WI, and SD.

Working with a mortgage loan officer who knows and understands the mortgage back security market, someone who can help you understand when to lock your interest rate, or if you should float your interest rate it critical.

I am one of those Loan Officers, not just your typical Loan Application Clerk.  I lend in MN, WI, and SD.


Mortgages rates basically unchanged for week ending 11/23/2012

Mortgage Rates Basically Unchanged

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates virtually unchanged and remaining near their record lows amid growing concerns around the fiscal cliff. The 30-year fixed-rate mortgage has averaged below 4.00 percent all but one week in 2012, while the 15-year fixed-rate mortgage has averaged below 3.00 percent since the last week in May.

News Facts

  • 30-year fixed-rate mortgages (FRM) averaged 3.32 percent with an average 0.8 point for the week ending November 29, 2012, up from last week when it averaged 3.31 percent. Last year at this time, the 30-year FRM averaged 4.00 percent.
  • 15-year fixed rate mortgages this week averaged 2.64 percent with an average 0.6 point, up from last week when it averaged 2.63 percent. A year ago at this time, the 15-year FRM averaged 3.30 percent.
  • 5-year adjustable rate mortgages (ARM) averaged 2.72 percent this week with an average 0.6 point, down from last week when it averaged 2.74 percent. A year ago, the 5-year ARM averaged 2.90 percent.

Quotes Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates were virtually unchanged this week amid growing concerns around the fiscal cliff. Although low mortgage rates failed to boost new home sales in October, year-to-date sales are up 20 percent compared with 2011 volumes, and there are growing signs of a turnaround in house prices. The S&P/Case-Shiller® national home price index (seasonally adjusted) rose 5.2 percent over the first three quarters of this year. In addition, all 20 of the city indices (seasonally adjusted) had positive growth over the first 9 months, led by a 17.9 percent increase in Phoenix. More recently, the Federal Reserve’s November 28th regional economic review, known as the Beige Book, noted that 10 of the 12 districts reported the market for single-family homes continued to improve leading into mid-November.”

Freddie Mac’s survey is the average of loans bought from lenders * last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s best MN and WI mortgage interest rates.

 


Fixed rates mortgages move higher for third straight week

Fixed Mortgage Rates Move Higher For Third Consecutive Week

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates following long-term Treasury yields higher. This marks the third straight week of fixed mortgage rates moving higher.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 3.62 percent with an average 0.6 point for the week ending August 16, 2012, up from last week when it averaged 3.59 percent. Last year at this time, the 30-year FRM averaged 4.15 percent.
  • 15-year mortgages this week averaged 2.88 percent with an average 0.6 point, up from last week when it averaged 2.84 percent. A year ago at this time, the 15-year FRM averaged 3.36 percent.
  • 5-year adjustable-rate mortgage (ARM) averaged 2.76 percent this week with an average 0.6 point, down from last week when it averaged 2.77 percent. A year ago, the 5-year ARM averaged 3.08 percent.
  • 1-year ARM averaged 2.69 percent this week with an average 0.4 point, up from last week when it averaged 2.65 percent. At this time last year, the 1-year ARM averaged 2.86 percent.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“The latest economic indicators point toward low inflation but gradually stronger economic activity which placed further upward pressure on long-term Treasury yields and, in turn, fixed mortgage rates. For example, inflation remains in check with 12-month growth in the core consumer price index falling for a second month to 2.1 percent in July. At the same time, industrial production rose 0.6 percent in July compared to a 0.1 percent increase in June and retail sales jumped 0.8 percent in July from a 0.7 percent decline in June.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points.

Follow this link to view today’s MN and WI mortgage interest rates.