Your Questions About Mortgage Rates News

Sandy asks…

Should I lock my variable mortgage with RBC?

I have a variable mortgage with RBC Bank. I heard news that interest rate will be going up starring next year. So I was wondering if I should lock my interest rate.

Also if I lock my variable mortgage will the monthly payment stay the same? Because with variable mortgage my monthly payment is always the same. If I lock it will it act as other mortgage where the monthly payment will be different each month.

admin answers:

Depending on what your rate is based off of depends on how often it adjusts, Some variable rates adjust monthly and others adjust yearly.

Right now rates are low and some MTA variable rates are EXTREMELY low, but you are right rates will go up and over the past two weeks they have went up.

As of today the average 30 year fixed rate is 5.04% which is higher than it was a month ago but still low.

It is up to you when you want to lock your rate but when you decide to lock it you will have to refinance again.

If your rate is going to start adjusting soon I would look in to refinancing ASAP to lock in to a low fixed rate.

When you lock your rate your payment might go up OR down depending on what your current rate is.

Example, if your rate is dependent on the MTA your rate is probably lower than today’s 30 yr fixed rate and your payment would go up.

But if you look @ the big picture you would still want to refinance now for a locked rate because like you said rates will go up beyond what they are today and when they do you will be saying shucks i should have refinanced.

If your rate is dependent on something else your payment might go down

In any case rates are at historical lows right now and if you are in an adjustable mortgage now you can expect your rate to go up eventually.

So again I would look in to refinancing ASAP but i wouldn’t necessarily go through with it yet.

Again it depends on your situation.

If you are at a 3.5% and it will not adjust for 3 months I would stay put for now but start shopping around.

If you are at a 6.5% and it is adjusting next week, month, or year I would shop around now and refinance ASAP.

You could call up RBC bank, or walk in to your local bank of America or Chase to find out what you could do.

You could also call a broker, they shop around for you and you will get a better deal.

Thomas asks…

Is it possible for me to lower my mortgage rate?

Fortunately, I’m not someone who is unable to make their house payment. I purchased my home back in 2008, put 20% down and got a 5.6% rate. I live within my means and make all my payments on time. I’ve recently been looking into ways to save some money and lower my interest rate. Bad news is, the value of my house has dropped by $150,000 so I can’t refinance. Do I have any other options to lower my rate?

If I was someone who couldn’t make their payments and lived in a house I couldn’t afford, I feel like there are lots of options and opportunities to get lower rates. I’m a responsible buyer and there seems to be no options. Am I being punished for being fiscally responsible? Anyone have advice or options???

Any advice will be appreciated. Thanks!

admin answers:

Go to your local credit union/bank and talk to them about this.

Linda asks…

Is it possible for me to lower my mortgage rate? If so, how?

Fortunately, I’m not someone who is unable to make their house payment. I purchased my home back in 2008, put 20% down and got a 5.6% rate. I live within my means and make all my payments on time. I’ve recently been looking into ways to save some money and lower my interest rate. Bad news is, the value of my house has dropped by $150,000 so I can’t refinance. Do I have any other options to lower my rate? If I was someone who couldn’t make their payments and lived in a house I couldn’t afford, I’m given breaks and opportunities to get lower rates, but I’m a responsible buyer and feel like I’m getting punished. Anyone have advice or options???

Any advice will be appreciated. Thanks!

admin answers:

No, but.

You shouldn’t feel too bad — the breaks and opportunities that other people are getting are (a) extremely limited and (b) universally failing.

Most people who might qualify because of income are not qualifying or getting modifications. Those who do get them are failing to make the new payments at astronomical rates (the last numbers I saw exceeded 80%). So — and I mean this less with tongue in cheek than slap on the back — the irresponsible ones are largely going to end up renters, eventually.

The big, nasty, exception to the rule are a select section of the snotty class. People who don’t really need money and can afford very high end housing. That is, people who can walk away from high end losses and buy high end bargains without needing (much) in the way of a mortgage.

Steven asks…

What happens to my mortgage if Countrywide goes into bankruptcy?

I read in the news that shares fell, and company could declare bankrupcy..would my mortgage(s) be affected as far as terms/rates?
I read this on latimes/cnn/thestreet.com

admin answers:

Some other company would pick up the loan, at the rate that was agreed upon

Chris asks…

What purpose do low interest rates serve?

Cui bono ? Whose good ? Low interest rates are good news for mortgage holders on variable rates. They are bad news for savers. They have not translated into any considerable increase in bank loans to firms with cash flow problems (the banks are understandably sniffy about taking risks) and relatively few firms are looking to borrow to invest. When bank loans are given, the interest rates are many, many times higher than bank rate – as are the rates charged by credit card companies. To the extent that the economy is recovering, this seems to be due to restocking and to cheaper exports in the wake of the low value of the GB £. Enlightenment please !
Antura Das : Thanks, but I acknowledged the point about mortgage holders. They are only one element in a much bigger economic picture, however. Where do low interest rates fit benefically into that larger picture ? But I appreciate your contribution.
Jonathan : Thanks. Neither quantitative easing nor the related low interest rates policy has radically improved the economy, so that it’s steaming ahead with a healthy GDP increase. From this viewpoint, low interest rates haven’t worked. Whether things would be worse without them is hard to say; we’d have to increase interest rates to find out. A thoughtful answer, though, and appreciated.
A lvmi follower : Yes, I know my von Mises & Hayek, much underrated thinkers. You write about the need for ‘capital formation and accumulation in that savers will be encouraged once again to put their money in the bank with the reward of higher rates of interest so the banks can then lend out money backed by production to lend to businesses’. The low interest rates policy is plainly, I can agree, not having this effect.
SDD : But the current low level of interest rates is purely artificial. It has been fixed by government. Presumably it has been fixed for a purpose. I was asking what that purpose was – and, obviously by implication, what good that purpose was actually serving.

admin answers:

Yes low interest rates do allow for cheaper mortgage rates and loans to business but they do have a very dark side as well.

In a capitalist economy, the rate of interest is determined by consumer preferences in the rate of savings of holding money today(demand deposits) and holding money for the future (time deposits).

The federal reserve system we have today is a system that sets the rate of interest arbitrarily by the chairman and his governors based on the rate of increase of money prices due to the increase in the money supply that they created by their own previous actions. Now being a regulated fractional reserve banking system where member banks are allowed to lend out 10 times the amount on deposit is another cause for the low rate of interest and where the beginning of the boom ensues and will eventually lead to destruction and disaster. The cheap money encourages businesses, homeowners and even students to embark on projects or schooling (dot com bubble I.T.industry) to invest in ultimately poor unsustainable investments such as construction projects that are profitable at the lower rates as opposed to a higher rate of interest or for homeowners to buy larger houses at cheaper rates that can’t afford when interest rates rise. (recent housing bubble). This also misallocates labour from the consumer intensive industries to the capital intensive industries. So as this process continues over time the rate of interest begins to rise and the inevitable bust starts to unravel and we get the results we have today malinvestments without the money to fund the projects anymore. Pursuance of these policies ultimately leads to capital consumption, poverty and higher unemployment rates over the longer term.

.What we need today to get the economy going again is capital formation and accumulation in that savers will be encouraged once again to put their money in the bank with the reward of higher rates of interest so the banks can then lend out money backed by production to lend to businesses and have a greater possibility to be sustainable for the long term and not created out of thin air through federal reserve counterfeiting practices.

Unfortunately, the10% fractional reserve banking system allows each dollar in demand deposits to grow by a factor of 10 which allows people who receive the money first to obtain products at lower prices at the expense of those who receive the money last and are forced to pay higher prices. The printing of dollars just dilutes the value of every dollar currently held over time, robs us all through higher prices and taxation and distorts the economy. It’s amazing when one starts to think about this problem when you start realizing that 90% of money lent is created out of thin air through counterfeit federal reserve notes. What a scam!!

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