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The Week In
Rates
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GOOD, BAD OR UGLY? All of the above.
Thursday, August 09, 2007
If we're looking at last week and home loan rates. Good news came in the form of friendly inflation and employment news, which helped rates on conforming home loans improve by about .125% over the course of the week. "Conforming" home loans are those under $417K, and subject to very standard credit, income and asset qualifying, nothing exotic, outside the box or fancy - and there's a reason those are being singled out here as having improved. More on that later.
A little bad news came by way of the Bureau of Economic Analysis, revising previous personal savings rate estimates higher, but showing that Americans still save less than 1% of their income. If you're not sure that you are preparing effectively for your future plans, like retirement or sending your kids to college, please get in touch with me, and let's review your situation to see if I have an idea or referral that might help.
The ugly last week - well, it was really ugly. The media screamed all week about issues in the mortgage industry, particularly impacting what are called "non-conforming" home loans; those that are dollar amounts higher than $417K, or with credit, income or assets not falling under traditional guidelines. Many of those rates got excessively ugly, in many cases, overnight. Why? It's an interesting story, and not one that even the media seems to understand very well. But read on, as this week's Mortgage Market View unpacks all the details...and what you can do now to make sure you won't be impacted.
Source: Mortgage Market Guide
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Why don't
we post rates?
Mortgage interest rates move up and down very much
like the stock market. Rates can move on a moment-to-moment
basis. There is absolutely no way for anyone to know
how interest rates may change an hour from now, let
alone a day or week from now.
Keep in mind that advertising generally requires
production of materials and advance scheduling for
placement of those materials. Those requirements mean
days or weeks of planning and preparation.
It can be very beneficial to consider how a lender
who advertises an interest rate today, for instance
in today's newspaper, could have possibly known what
the rates would be today - when that advertisement
was produced days in advance.
While interest rates for consumer loans - such as an
automobile loan - are more stable and predictable, mortgage
interest rates move constantly. Therefore, we encourage
a healthy level skepticism toward advertisements for
mortgage loans that offer a specific rate. It's rather
like a stock broker promising that a certain stock will
be trading at a certain price - next week.
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