Average mortgage rates nudged higher yesterday. And they’re now near the top of the narrow change within which they’ve been moving for a month or two. Read on to discover what happened. Meanwhile, Freddie Mac’s chief economist observed this morning, “Overall, rates continue to be low, with a window of opportunity for those who did not refinance under three percent.”
First thing this morning, key markets were signaling that mortgage rates today might rise again. But yesterday reminded us that those early signs aren’t always reliable.
COVID-19 mortgage updates: Mortgage lenders are changing rates and rules due to COVID-19. To see the latest on how coronavirus could impact your home loan, click here.
Should you lock a mortgage rate today?
Does yesterday’s unexpected nudge upward in mortgage rates mean those rates are no longer becalmed? It’s too soon to reach that conclusion. But we may be in for a little more volatility than we’ve grown used to over the last month or so. Or a lot more, depending on what the Fed chair says in his speech tomorrow morning.
And that brings into focus the risks of continuing to float your rate. Yes, rates may fall back again. But I suspect rises are likely to outweigh the falls when measured over weeks and months. So I’d lock my rate soon if I were you. But I’m not. And you may have a higher appetite for risk than I do.
So, for now, my personal rate lock recommendations remain:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
FLOAT if closing in 45 days
FLOAT if closing in 60days
However, I don’t claim perfect foresight. And your personal analysis could turn out to be as good as mine — or better. So you might choose to be guided by your instincts and your personal tolerance for risk.
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:
The yield on 10-year Treasury notes edged up to 1.36% from 1.31%. (Bad for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
Major stock indexes were mixed shortly after opening. (Neutral for mortgage rates.) When investors are buying shares they’re often selling bonds, which pushes prices of those down and increases yields and mortgage rates. The opposite may happen when indexes are lower
Oil prices dropped to $67.30 from $67.56 a barrel. (Neutral for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity.
Gold prices inched down to $1,787 from $1,791 an ounce. (Neutral for mortgage rates*.) In general, it’s better for rates when gold rises, and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to push rates lower
CNN Business Fear & Greed index — increased to 47 from 42 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are better than higher ones
*A change of less than $20 on gold prices or 40 cents on oil ones is a fraction of 1%. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, so far mortgage rates today look likely to rise. But be aware that “intraday swings” (when rates change direction during the day) are a common feature right now.
Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the wider trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases. And a recent regulatory change has narrowed a gap that previously existed
So there’s a lot going on here. And nobody can claim to know with certainty what’s going to happen to mortgage rates in coming hours, days, weeks, or months.
Are mortgage and refinance rates rising or falling?
Today and soon
The current received wisdom is that investors are keeping mortgage rates (and Treasury yields) low because they’re worried about the economic damage that the COVID-19 Delta variant might wreak.
To hedge against that, general investors are supposedly buying piles of mortgage-backed securities (MBSs — the type of bond that largely determines mortgage rates) and Treasury bonds, which pushes up their prices. And bond prices and yields invariably move inversely. So the higher the price, the lower the yield — or mortgage rate.
Voilà! That’s why mortgage rates are currently low, even though the economy is booming and inflation is higher than usual.
Or is it? How do you explain various stock indexes setting record highs on a regular basis if investors are cowering in the shadow of the Delta variant?
The role of banks
Yesterday, The New York Times suggested an alternative explanation. Under the headline, “Banks Are Bingeing on Bonds, but Not Because They Want To” (paywall), it suggested that banks are awash with deposits but currently have too few lending opportunities to place that money profitably. It continued:
So banks have largely been left to invest in one of the least lucrative assets around: government debt. Rates on Treasury bonds are still near historically low levels, but banks have been buying government debt like never before. In the second quarter of 2021, banks bought a record of about $150 billion worth of Treasurys, according to a note published this month by JPMorgan analysts.
Now take a moment and throw away your sodden tissue.
Almost certainly, some of the banks’ money has been invested in mortgage-backed securities, simply because investors often choose between those and Treasurys when they want ultrasafe, low-yield bonds. That’s why MBS yields typically shadow those of 10-year Treasury notes.
The Fed’s role
In addition to banks buying bonds, the Federal Reserve is purchasing even larger quantities. JPMorgan reckons banks are spending about $50 billion a month on Treasurys, which equals $150 billion a quarter. But the Fed’s buying $80 billion worth of Treasurys each month.
And the Fed’s MBS purchases alone cost $40 billion a month in new money, plus sometimes $60 billion in recycled funds. Add in the banks’ likely contribution and suddenly you can see why mortgage rates are currently so low at a time when they should normally be rising.
But the Fed has, in recent months, been signaling that it wishes to “taper” (slow and then stop) its purchases of MBSs and Treasurys. And, once it stops keeping mortgage rates artificially low, we’ll likely see them rise, even if banks keep buying at their current rate.
But nobody knows for sure when tapering will begin, beyond that it’s highly likely to happen within the next four months.
Powell speech tomorrow
And that brings us to Fed Chair Jerome Powell’s speech at 10 a.m. (ET) tomorrow morning. I’ve been trailing it all week because it could turn out to be crucial. That’s because investors around the globe will be parsing his every word in the hope of identifying hints as to when tapering might begin.
Time was when some thought Mr. Powell might actually announce the Fed’s whole tapering program during his speech. But that seems a smaller possibility now.
And it’s perfectly possible that he’ll choose not to drop even the vaguest hint. But, if he does intimate anything new about tapering, that probably will move mortgage rates — more likely upward, depending on what he says.
Indeed, yesterday’s rise in mortgage rates may be explained, at least in part, by investors positioning themselves ahead of that speech. And, if that’s the case, we may see more of the same today.
Over much of 2020, the overall trend for mortgage rates was clearly downward. And a new, weekly all-time low was set on 16 occasions last year, according to Freddie Mac.
The most recent weekly record low occurred on Jan. 7, when it stood at 2.65% for 30-year fixed-rate mortgages. But then the trend reversed and rates rose.
However, those rises have been mostly replaced by falls since April, though typically small ones. Freddie’s Aug. 26 report puts that weekly average at 2.87% (with 0.6 fees and points), up from the previous week’s 2.86%.
Expert mortgage rate forecasts
Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their current rate forecasts for the remaining quarters of 2021 (Q3/21 and Q4/21) and the first two quarters of 2022 (Q1/22 and Q2/22).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s and the MBA’s were updated on Aug. 19. But Freddie’s were last refreshed on July 15 because it now publishes these figures only quarterly.
However, given so many unknowables, the current crop of forecasts might be even more speculative than usual.
All these forecasts expect higher mortgage rates soon. But the differences between the forecasters are stark. And it may be that Fannie isn’t building in the Federal Reserve’s tapering of its support for mortgage rates while Freddie and the MBA are.
Find your lowest rate today
Some lenders have been spooked by the pandemic. And they’re restricting their offerings to just the most vanilla-flavored mortgages and refinances.
But others remain brave. And you can still probably find the cash-out refinance, investment mortgage or jumbo loan you want. You just have to shop around more widely.
Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.
However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.
What is Sallie Mae?
Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.
In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.
However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.
In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).
At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.
What is the difference between private and federal student loans?
With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.
On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.
Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.
As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.
Are Sallie Mae loans better than federal student loans?
In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.
However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.
If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.
With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.
The bottom line
Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.
Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.
PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have.
1. Analyze Your Finances Quarterly or Biannually
You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.
With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.
The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.
4. Savings and Retirement Accounts
The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.
A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies.
Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan.
Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito.