Your Questions About Mortgage Rates

Linda asks…

What influences mortgage rates?

I am doing a regression analysis for a finance class, and I want to look at variables that influence or relate to the 30-Year Conventional Mortgage Rate… like interest rates of T-Bills or something.

I just need suggestions on variables that may affect mortgage rates. Thank you!

admin answers:

10 year bonds should show the closest correlation. It is not cause and effect but they are influenced by the same fundamentals, inflation, expected inflation, fed funds rate and GDP growth rate.

Sharon asks…

Do you think the mortgage rates will lower or keep climbing in the near future?

I got a 2 year fixed loan almost two years ago on my mortgage with money out to clean up credit so I could get a better rate but the rates have rose even higher. Should I lock in now or wait 5 months I have left to see what happens?

admin answers:

The average* rate right now for a 30 year fix is 5.95% (with 0.61 points) making a APR of 6.14% and for a 15yr Fixed is 5.65% (0.62 points) making a APR of 5.95%. This is a 5 month low. It is funny intrest rates and gas price drops around election time.
I don’t think it will be this low in 5 months so I think you get it fixed. But first speak to a mortgage specialize and try to reduce the points. I vote to lock it in now.

* Check your rate in your City and State

Sandy asks…

The fed adjusts short term interest rates. What affects long term rates such as a 30 year fixed mortgage?

I am interested to find out what will make the 30 year mortgage rates rise and fall? I have heard that it is tied to the treasury note. Please help. Thank you.

admin answers:

Yes the mortgage rates follow the 10 year bond. So you can go to yahoo finance and click on the ten year bond and you will be able to compare that to interest rates. We watch it for our loans in float waiting to lock them for our clients.

Michael asks…

Why is the mortgage rates going up so high and so fast?

If Obamas stimulus pacakge gave so much $ to the banks and the banks wants to loan the money so the economy can recover from the recession, then why is the mortgage rates going up so high and so fast? This make people less attracted to purchasing a new home. Im from so cal and with the $8K rebate, its nothing since the median home prices are $450K & up

admin answers:

Mortgage rates are tied closely to the 10 year Tbond which has been increasing.

Many reasons but one is stock market is going well so investors in Tbonds have stopped buying Tbonds and chasing higher yields in equities. Because not as many buyers the yields have gone up on tbonds to try and attract investors.

Back in the fall everyone one was buying treasuries because of their safety and it drove intereset rates down because so many wanted to buy them. Well now reverse is happening as investors are no longer worried about safety but are chasing higher yielding investments.

Laura asks…

Fixed rate mortgage – am I paying more off at the moment due to interst rates being low?

I’m a bit confused. I’m on a fixed rate repayment mortgage and with rates being so low at the moment is it just tough on me for paying more or am I actually paying off more off my mortgage each month?

admin answers:

Since you are on a fixed rate mortgage, you are locked into whatever interest rate you signed up for when you originally got your mortgage. In this economy, as rates get lower than what you originally locked into, you would not benefit from the rates going lower unless you refinance and get a new loan with a new lower interest rate.

What you probably should do is look at your monthly mortgage statement which breaks down your payment and lets you see how much of the payment is going towards principal, interest and escrow account. This way you can easily see how much is really being paid off each month.

Powered by Yahoo! Answers

Leave a Reply