Rates are up! Rates are down!

Gotta love the media. They scream at us that interest rates are worse, and that interest rates are better. All they’re doing is reading from a teleprompter – so what’s true?

It’s all about context. The Federal Open Market Committee did indeed raise the Federal Funds Rate at their March 15 meeting. So, “rates are up”, right? Not in our market. Mortgage rates actually liked it and are slightly better since the hike.

The stock market has been on a tear since November. So, “rates are down”, right? No, stock market rallies tend to make mortgage rates worse. They pull investor money out of the bond market into the stock market.

To boot, mortgage backed securities, which is where your home loan ends up after we close escrow, move continually throughout each day. We’ve had three mid-day lock alerts in the past two weeks, because pricing was getting worse during the trading day.

What does all this mean to you as a consumer? In my opinion, it means shut off your TV. Align yourself with an educated mortgage professional who has their finger on the pulse of what is currently happening regarding the rate on your loan. There are so many variables in any given loan file that general news can be meaningless. You may be panicking or exalting for no good reason.

Here’s a quick example from my desk to illustrate market swings this year. When we measure the best and worst days for interest rates, we see that the best market so far this year was on January 12, and the worst market was March 14.

For a $230,000 purchase using conventional financing, this equates to 0.375% difference in rate on those two days. For that loan, the payment differs by $49/per month because of the rate. I would suggest that if $49 a month busts your home loan budget, maybe you aren’t ready to be a homeowner.

Rates are up or down depending on what they’re being compared to. Your friends and your favorite newscaster are not as studied about home loan finance as the professional you choose to guide you through the process. Work with someone who has earned your trust based on their prior track record, then rest easy while we get your financing done. It doesn’t have to be an emotional roller coaster.

Tammy Engel is your local Mortgage Advisor and has been working for your best interest since 1990. Contact her at (661) 822-7325 for help with purchase, refinance, and reverse mortgage.