mortgage rates – John Hesch http://johnhesch.com/ Mon, 21 Mar 2022 16:28:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://johnhesch.com/wp-content/uploads/2021/07/icon-150x150.png mortgage rates – John Hesch http://johnhesch.com/ 32 32 Can you get a mortgage if you have bad credit? https://johnhesch.com/can-you-get-a-mortgage-if-you-have-bad-credit/ Mon, 21 Mar 2022 16:28:00 +0000 https://johnhesch.com/can-you-get-a-mortgage-if-you-have-bad-credit/ If your credit isn’t great and you want a mortgage, you’re not always doomed, but you could pay a higher rate. Getty Images/iStockphoto Can I get a mortgage if you have bad credit? It’s a question that comes to readers from time to time, and the answer is: if your credit isn’t great and you […]]]>

If your credit isn’t great and you want a mortgage, you’re not always doomed, but you could pay a higher rate.

Getty Images/iStockphoto

Can I get a mortgage if you have bad credit? It’s a question that comes to readers from time to time, and the answer is: if your credit isn’t great and you want a mortgage, you’re not always doomed, but you can pay a higher rate. According to March 17, 2022 rate data from MyFico, a borrower with a credit score just between 660 and 679 can expect to receive an average APR of 4.46%. This compares to 3.85% for someone with an excellent credit score between 760 and 850. Over time, this could translate to a borrower with a lower score paying thousands of dollars more for their mortgage. .

Sometimes you won’t be able to get a mortgage at all if your score is low. Indeed, some lenders have minimum score requirements. For example, Freddie Mac and Fannie Mae both require a 620 or higher, and many other lenders follow these rough guidelines as well. That said, it’s not impossible to get a loan if your credit score is lower. Here’s what the pros told us.

Look at FHA, VA and USDA mortgages

Depending on your situation, you may consider applying for an FHA or VA loan. “Both loan programs not only have less stringent credit requirements than most traditional loans, they also have less stringent income and down payment requirements,” says Jacob Channel, senior economist at LendingTree. Adds Holden Lewis, real estate and mortgage expert at NerdWallet: “If your credit score is below 720 and you don’t have a 20% down payment, consider an FHA-insured mortgage or a VA-backed loan. if you are eligible.

What is an FHA loan?
An FHA loan is a US Federal Housing Administration insurance-backed mortgage that requires a lower minimum credit score than other loans. Borrowers can have a credit score as low as 500 to qualify, but those with a score between 500 and 579 will need to deposit 10%, while those with a score above 580 will only need to deposit 3 .5%.

FHA loans also require mortgage insurance, and all FHA loans require the borrower to pay two insurance premiums; an initial mortgage insurance premium which is 1.75% of the loan amount and an annual mortgage insurance premium which varies from 0.45% to 1.05% depending on the term of the loan. If you borrow $150,000, your initial mortgage loan insurance premium would be $2,625 and your annual premium would range from $675 to $1,575, spread over 12 months.

What is a VA loan?
A VA loan is a government loan that is available to active and veteran duty personnel and their eligible surviving spouses. You can get a VA loan with no down payment and they offer lower interest rates than other mortgages, plus they don’t have a monthly mortgage insurance requirement. VA loans do not require a minimum credit score, and instead individual lenders determine their specific requirements. The VA does not limit the amount you can borrow, but the loan limit for a no down payment loan is $647,200 for many counties. Still, even without a down payment, be prepared to pay closing costs and other fees, like VA financing fees that range from 2.3% to 3.6% of your loan amount. You will also need to prove that you have two months of mortgage payments in a reserve fund.

What is a USDA loan?
A USDA loan is a zero-down payment mortgage specifically designed for very low-income rural and suburban homeowners, for homes 2,000 square feet or less. Interest rates on these loans can be as low as 1% and borrowers with credit scores below 640 may be eligible for USDA loans, but will need to be manually approved, taking into account factors such as cash reserves and low indebtedness.

Compare the prices for the best mortgage rates and conditions

Another way for low credit borrowers to increase their chances of getting a mortgage is to shop around and compare multiple lenders on rates and terms. The pros say 3-5 quotes is a good goal: “The more lenders you look at, the more likely you are to find one that’s willing to work with you,” says Channel.

But here’s something to consider: when you apply for a new line of credit, a serious request is recorded on your credit report and can potentially lower your score. “A firm credit application will stay on your credit file for 24 months and can impact your score for the first 12 months,” says Glenn Brunker, president of Ally Home. This guide will help you learn how to shop around for a mortgage without hurting your credit score too much.

If you’re intimidated by shopping around on your own, using a mortgage broker can be helpful in finding special rates as well as saving your time and expense.

Improve your credit score before you apply for a mortgage

The good news is that your current credit score isn’t permanent — and improving your score can lower your borrowing costs and give you more options to choose from when taking out a loan. To do this, pay your bills on time, repay your debts and avoid opening new lines of credit. “After your payment history, your debt-to-equity ratio, also known as your credit utilization ratio, is the second most important factor in your credit score. When you pay down your balances, the availability of your credit increases and, in short, the lower your credit card, retail store, gas station and HELOC debt, the higher your FICO score,” says Brunker.

While fraud and credit reporting errors are out of your hands, they are known and if left undetected, you could pay the price in the form of a lower credit score. “If you find any inaccuracies in your report, you should contact the appropriate credit reporting agency immediately to report the issue,” says Brunker.

Improve your debt ratio before submitting your application for a mortgage

Your debt-to-income ratio is the sum of your monthly debt payments like your mortgage, car payments, student loans, and credit card payments, divided by your gross monthly income. Lenders generally like to see a DTI ratio no higher than 36%, while a DTI of 43% is generally the highest a borrower can have while qualifying for a mortgage.

Save more for a down payment on a house

As a general rule, the more money you can spend on a down payment, the better the rate you are likely to receive. With that in mind, those putting 20% ​​or more on a home can generally expect to get a very competitive rate, assuming they earn a decent income and have a good credit score. “Of course, a down payment isn’t the ultimate solution when it comes to getting a good interest rate on your mortgage, and even if you can’t afford to put down a lot, you can still get a good rate if you have great credit,” Channel says.

Remember to wait about getting a mortgage

Because a higher rate can make monthly payments hundreds of dollars more expensive — and cost thousands of dollars in interest over time — Channel says it might make more sense for some poorer borrowers to delay payment. getting a mortgage and instead working to boost their rating. “The higher your score, the more likely you are to find a lender and the better your rate will be,” Channel says.

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Have interest rate hikes in New Zealand brought any changes? https://johnhesch.com/have-interest-rate-hikes-in-new-zealand-brought-any-changes/ Wed, 09 Mar 2022 06:25:00 +0000 https://johnhesch.com/have-interest-rate-hikes-in-new-zealand-brought-any-changes/ Wednesday, March 9, 2022, 7:25 p.m.Press release: Kalkin Summary The political action unfolded in the form of several closely spaced interest rate hikes in New Zealand over a short period. The immediate effect of an interest rate hike was felt in the foreign exchange market for the New Zealand dollar. Some experts suggest that domestic […]]]>


Summary

  • The political action unfolded in the form of several closely spaced interest rate hikes in New Zealand over a short period.
  • The immediate effect of an interest rate hike was felt in the foreign exchange market for the New Zealand dollar.
  • Some experts suggest that domestic policy measures may not be effective against inflation resulting from international forces.

In the era of COVID-19, central banks around the world have resorted to interest rate hikes to combat inflationary pressures and move closer to normalcy. For New Zealand, the political action unfolded in the form of several closely spaced interest rate hikes in a short period of time. This has left many people worried about the economy and house prices.

Despite the uncertainty, financial confidence is improving among New Zealanders. According to the latest Financial Resilience Index (FRI) from the Financial Services Council, more and more people feel secure about their jobs. At a time when the country is slowly moving towards economic stability, rising interest rates appear to pose serious affordability and consumer spending issues.

Overall, it is difficult to separate the effects of rising interest rates from a whirlwind of growing geopolitical tensions. In the meantime, some direct impacts of an interest rate hike are already visible. These effects can translate into a slowdown in spending over time if policy tightens again.

GOOD READING: New Zealand consumer confidence plummets, will it rebound soon?

NZD and mortgage rates

The hawkish policy stance taken by the Reserve Bank of New Zealand (RBNZ) has led to many short-term changes across the economy. Finally, the central bank raised interest rates by 25 basis points, bringing the current interest rate to 1%. While the move was largely expected, it was the RBNZ’s third interest rate hike since the pandemic began.

The immediate effect of an interest rate hike was felt in the foreign exchange market for the New Zealand dollar. The indication of a tightening cycle initially pushed the New Zealand dollar higher as the currency found comfort in rising resource prices. However, it recently fell from new 2022 highs after skyrocketing oil prices threatened the global economic recovery.

Besides the local currency, mortgage rates also reacted to changes in interest rates. Following in the central bank’s footsteps, commercial banks like ASB and Westpac have recently raised mortgage interest rates, but to a lesser extent. Both banks took inspiration from ANZ’s decision to raise mortgage rates to dampen inflation.

Experts suggest that rising mortgage rates are crucial for stabilizing house prices as it could discourage even the wealthiest borrowers from taking out a loan. The effects of these expectations are visible in the easing of real estate prices observed in January, with the drop in sales leading the way.

Fight against inflation

While the central bank’s efforts are focused on controlling the rate of inflation, little effect has been observed so far on consumer prices. Rising consumer prices have become a persistent problem amid supply chain constraints and lack of adequate manpower.

Some experts suggest that domestic policy measures may not be effective against inflation resulting primarily from international forces. Supply bottlenecks developed in global economies require a well-integrated solution with a broader reach.

Meanwhile, other experts say interest rates have a direct impact on investors’ risk and investment appetite. They believe that changes in interest rates can affect consumer spending and inflation. However, recent data suggests that these links have led to a slowdown in stock market activity. Alternatively, the successful recovery of the economy has helped support an improvement in corporate profit margins.

Despite tentative results, the central bank is expected to press ahead with tightening measures in the coming months. Speculation is rife that the RBNZ will undertake a more aggressive tightening of monetary policy and reduce its bond holdings of NZ$50 billion acquired under the large-scale asset purchase program in the coming months. It remains to be seen whether this will be the central bank’s longstanding response to skyrocketing inflation.

GOOD READING: New Zealand transport services take a hit amid Omicron wave

Despite continued headwinds, some experts are predicting up to ten consecutive 25 basis point rate hikes from the RBNZ. However, rising interest rates could hamper economic activity, doing little to control the larger problem of rising inflation. Meanwhile, the outlook for New Zealand’s economy remains uncertain amid the ongoing Russian-Ukrainian war, even with adequate political regulation.

© Scoop Media

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Interest rate hikes could leave buyers out in the cold https://johnhesch.com/interest-rate-hikes-could-leave-buyers-out-in-the-cold/ Tue, 08 Mar 2022 23:14:00 +0000 https://johnhesch.com/interest-rate-hikes-could-leave-buyers-out-in-the-cold/ Millions of people could see their homeownership plans thwarted if interest rates continue their upward trajectory, according to research by the National Association of Home Builders. The recent spike in interest rates adds to record price increases over the past two years and increased competition among buyers. For those looking to buy, a 25 basis […]]]>

Millions of people could see their homeownership plans thwarted if interest rates continue their upward trajectory, according to research by the National Association of Home Builders.

The recent spike in interest rates adds to record price increases over the past two years and increased competition among buyers. For those looking to buy, a 25 basis point rate hike to current median new home price levels could result in more than a million fewer eligible borrowers, according to NAHB.

“Mortgage payments will rise due to rising mortgage interest rates, and therefore higher household income thresholds would be required to qualify for a mortgage,” wrote Na Zhao, senior economist at NAHB. But if rates rise above the 6% mark, the number of locked-out buyers decreases, due to fewer high-income borrowers in the population.

Using an estimated median new home price of $412,505 in 2022 as a benchmark, NAHB found that the effect of a 30-year interest rate increase from 3.5% to 3.75% would eliminate more of 1.1 million buyers. Based on an interest rate of 3.5%, a home purchased at the median would result in monthly mortgage payments of $1,822, the researchers found, and would require a minimum income of $99,204. Currently, 39.2 million households are eligible for a purchase of this amount. But once the rate jumped to 3.75%, monthly payments would rise to $1,877 with eligible income of $101,548, reducing the number of eligible households to 38.1 million.

NAHB estimated the median price based on a Case-Shiller Home Price Index forecast from preliminary 2021 data. This number is also not far off the cost of all single-family homes in sell nationwide. In the fourth quarter of last year, the US Census Bureau and the US Department of Housing and Urban Development determined that the median value of homes for sale had risen to $408,100, rising nearly 14% on a yearly basis. Median prices by region ranged from $370,200 in the South to $549,600 in the Northeast.

For potential buyers, the recent spike in rates represents another hurdle to home ownership goals. The NAHB had already warned last month of turbulence ahead for buyers and sellers in 2022, especially for new homes. “Building material costs are up 21% from a year ago,” NAHB chief economist Robert Dietz said in a news release.

“Rising mortgage rates combined with rising construction costs and a lack of construction workers will increase affordability headwinds in the coming year.”

According to Freddie Mac’s Weekly Mortgage Market Survey, the average 30-year interest rate in mid-February had climbed more than 80 basis points in less than two months, but has since retreated with the start of the Russian-Ukrainian war. Last week’s 30-year rate came in at 3.76%, still well above the 2.9% range it hovered over most of last summer.

Two weeks ago, the The Mortgage Bankers Association has predicted that interest rates will likely rise to 4.3% by the end of this year and 4.5% in 2023, with purchase volumes also expected to rise from last year among its members. According to NAHB estimates, a quarter percent jump in interest rates from 4.25% to 4.5% would require an income level of at least $108,782 and result in about 1.2 borrowers less eligible.

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Rising interest rates are nothing to fear https://johnhesch.com/rising-interest-rates-are-nothing-to-fear/ Sun, 27 Feb 2022 16:00:00 +0000 https://johnhesch.com/rising-interest-rates-are-nothing-to-fear/ Reveling in a historically low cash rate target (0.1%) since November 2020 to support job creation and the recovery of the Australian economy from the COVID-19 pandemic, interest rates should soon to rise, with inflation rising faster than the Reserve Bank of Australia (RBA) had predicted. At the recent meeting held on February 1, RBA […]]]>

Reveling in a historically low cash rate target (0.1%) since November 2020 to support job creation and the recovery of the Australian economy from the COVID-19 pandemic, interest rates should soon to rise, with inflation rising faster than the Reserve Bank of Australia (RBA) had predicted.

At the recent meeting held on February 1, RBA Governor Philip Lowe said the Omicron outbreak had affected the economy, but it had not derailed the economic recovery.

“Australia’s economy remains resilient and spending is expected to increase as the number of cases tends to fall,” he said.

“This outlook is supported by household and corporate balance sheets that are generally in good shape, a recovery in business investment, a large construction pipeline and supportive macroeconomic policies.”

Adding to that good reputation, Mr Lowe said the labor market had recovered significantly, with the jobless rate falling to 4.2% in December and wage growth picking up – but only at the relatively low rates that prevailed before the pandemic.

“House prices have risen sharply, although the rate of increase has slowed in some cities,” he said.

“With interest rates at historic lows, it is important that lending standards are maintained and borrowers have adequate reserves.”

As the economy steadily recovers during tough times, many are calling on the RBA to raise the cash rate as soon as its next meeting in March.

While this may seem daunting to some, Mark Hay Realty Group Director Mark Hay stressed that interest rate hikes were inevitable and nothing to worry about given that ‘they tended to move in increments not exceeding 0.5%.

“Everyone is afraid of rising interest rates, but surely interest rates have to go up just because of the way the economy is doing,” he said.

“Interest has been steadily declining for the past 13 years because the economy was not stimulated.

“With interest rates at historic lows, even if they go up 1%, it won’t do much here in Western Australia.”

According to Hay, a rise in interest rates will lead to greater mortgage stress in eastern states where median prices are above $800,000, compared to WA’s median of around $500,000.

“The average mortgage in the eastern states is over $800,000, so if interest rates move 0.5%, that’s $4,000 a year that they have to find, and that will cause some mortgage stress over a period of time,” he said. .

“Our median price in WA is around $500,000, so if you have someone with a $400,000 mortgage and a 0.5% raise, that’s $2,000 a year.

“If they give up one takeout meal a week, that will basically cover it, so it won’t have the dramatic effect that people are suggesting.”

Pulling out some of the hysteria and heat of the debate over rising interest rates, Mr Hay compared the current situation to the astronomical rates he saw in the 1980s.

“I lived when we had 18.5% interest – you couldn’t imagine that,” he said, adding that when the economy is doing well, everything goes up, including rents, wages and interest rates.

“This is the mechanism that the government is using through the RBA to revive the economy.”

What does this mean for homeowners and homebuyers?

Mr Hay said it was important for homeowners to lock in mortgage rates to get the best rate before interest increases.

“If I was anyone right now, I would definitely lock in my interest rate for as long as possible,” he said.

“Rather than pay the variable rate, you have to pay a little more, but I would lock it in so you can meet the deposit from the start with the interest rate going up.”

Buyers in the market are encouraged to buy now as borders are set to open on March 3, which could further worsen the housing shortage.

“If you are in a position to buy, I would buy now before the borders open and more people fight over the shortage of stock,” Mr Hay said.

“We have too many variables happening at the same time. I think what I will pay more attention to is that when the borders open there will be an influx of people coming to WA.

“Our agency has sold several multi-million dollar properties to unseen people in Melbourne, Sydney, Coolangatta in Queensland and Texas.”

However, Mr Hay offered some peace of mind, saying he did not think the WA rush would be as big as expected.

“I don’t think it’s going to be such a boom as what people are saying when the borders open up, because you have to understand that the construction industry on the east coast is also going through a pretty buoyant time,” he said. he declares.

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Interest rate hike expected in June and increase in mortgage repayments https://johnhesch.com/interest-rate-hike-expected-in-june-and-increase-in-mortgage-repayments/ Tue, 15 Feb 2022 06:08:51 +0000 https://johnhesch.com/interest-rate-hike-expected-in-june-and-increase-in-mortgage-repayments/ A borrower with a standard variable rate mortgage of $500,000 would see their monthly repayments increase by about $275 with a 1% rate increase and about $560 with a 2% rate increase. A homebuyer with an $800,000 loan would see their monthly payments cost $440 more with a 1% increase and $900 with a 2% […]]]>

A borrower with a standard variable rate mortgage of $500,000 would see their monthly repayments increase by about $275 with a 1% rate increase and about $560 with a 2% rate increase.

A homebuyer with an $800,000 loan would see their monthly payments cost $440 more with a 1% increase and $900 with a 2% increase.

People with variable mortgage rates would not be the only ones affected by a rise in the official exchange rate. Aird said about $500 billion in fixed-rate mortgages are set to expire over the next 24 months, exposing those borrowers to higher rates.

AMP chief economist Shane Oliver expects the RBA to hike the cash rate in August but now says it could ‘eventually’ happen in June due to stronger inflation data strength, strong employment outcomes and the onset of wage growth.

Over the next two years, he expects the interest rate to peak between 1.5% and 2%.

“It would add a similar amount to variable mortgage rates,” Dr Oliver said. “This will bring interest payments on household debt relative to income back to around 2018 levels.”

HSBC economists now expect rates to rise by half a percentage point in the second half of 2022 from August at the earliest, with increases now “likely” rather than “plausible”.

Financial markets are even more aggressive, now pricing in a spot rate of 1% by October and a spot rate of 2% by May.

Consumers are also under inflationary pressures. The weekly ANZ-Roy Morgan measure of consumer sentiment reveals a further rise in inflation expectations, with respondents tipping it up to 5%.

Inflation, currently at 3.5%, is a growing political problem for the federal government. This week, The Sydney Morning Herald and age revealed that the government was debating the merits of extending the low- and middle-income tax offset for another year as a $7 billion election sweetener.

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But he is warned that such a tax cut could fuel a further rise in inflation, forcing the Reserve to act more quickly on interest rates or push them higher than expected.

Pressed to raise the price of beef by 65% ​​since the end of 2013, Prime Minister Scott Morrison linked inflationary pressures to the state of the budget.

“I’m talking about the inflationary pressures in this country. And that’s on top of the cost of living. An important way to make sure we can control those inflationary pressures is in the financial management of government,” he said. declared.

Figures released during a Senate estimates hearing on Tuesday showed there are about $5.5 billion in government decisions made in its mid-year budget update that have yet to be made. public. They are expected to be released over the next six weeks, ahead of the March 29 budget.

They do not include the $2.3 billion in additional spending the government has revealed in recent weeks, such as its $400 bonuses for older workers.

In its mid-year update, the 2022-2023 budget was expected to show a deficit of $84.5 billion.

Shadow Treasurer Jim Chalmers is said to be undecided whether Labor would support extending tax compensation for low and middle incomes, arguing cost of living pressures could be dealt with in other ways.

“We have to get wages to rise again because real wages are falling. We have a policy there. We have to think about the cost of living in all areas. Taxation is an important part of the story, but it is not the only part of the story,” he said.

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Latest survey of real estate agents indicates buyers rush to beat interest rate hikes as prices moderate https://johnhesch.com/latest-survey-of-real-estate-agents-indicates-buyers-rush-to-beat-interest-rate-hikes-as-prices-moderate/ Mon, 14 Feb 2022 05:50:52 +0000 https://johnhesch.com/latest-survey-of-real-estate-agents-indicates-buyers-rush-to-beat-interest-rate-hikes-as-prices-moderate/ According to the January 2022 edition of the HousingIQ survey of Kentucky realtors, two in five Kentucky realtors say buyers are racing to beat mortgage rate hikes while realtors’ expectations for price growth housing continues to moderate. Compared to a year ago: • 42% expect house prices to rise – a drop of 16 points• […]]]>

According to the January 2022 edition of the HousingIQ survey of Kentucky realtors, two in five Kentucky realtors say buyers are racing to beat mortgage rate hikes while realtors’ expectations for price growth housing continues to moderate.

Compared to a year ago:

• 42% expect house prices to rise – a drop of 16 points
• 45% expect homes to stay on the market longer – an increase of 23 points
• 31% expect more price reduction from home sellers – an increase of 14 points
• 30% anticipate an increase in foot traffic – down 14 points

“As mortgage rates rise, buyers who are already in the market are accelerating the process,” said Vidur Dhanda, author of the survey. “Going forward, economic volatility and rising rates will deter buyers and curb house price growth. 39% of survey respondents said buyers were holding back due to concerns about the economy, although 44% said buyers were rushing to beat rate increases. »

In the latest issue of the Home Buying Sentiment Index, which tracks national consumer sentiment, Fannie Mae reported a record survey 25% of respondents said now was a good time to buy a home. home, compared to 52% a year ago.

The Mortgage Bankers Association reported that the national weekly purchase index was 12% lower than a year ago.

35% of Kentucky real estate agents said sellers are signing up in anticipation of a cooling market. Fannie Mae reported that 69% of consumers nationwide said now was a good time to sell.

“The owners’ ability to sell is limited by low inventory,” Dhanda said. “Very often the sale is lifestyle or job oriented and requires a corresponding purchase. We need more construction and there are early indications of an increase.

Based on monthly survey data, the HousingIQ/Kentucky REALTORS® Confidence Index provides a composite measure of expectations for the Kentucky real estate market over the next year.

the HousingIQ/Kentucky Realtors Trust Index rose two points from a month ago to close at 47. A value of 100 corresponds to all respondents agreeing that market conditions will improve. On the other hand, 50 corresponds to respondents who do not anticipate any change in market conditions.

The Purchasing Power sub-index lost six points and the Price Expectations sub-index fell two points. The homeowner stress sub-index continued to improve to close the month at 67.

The overall index is down four points from a year ago, with price expectations down seven points. Compared to a year ago, purchasing power has jumped 16 points and owner stress has improved by nine points.

The results point to a market where price appreciation is slowing as buyer enthusiasm wanes.

The survey results are available at housingiq.com

Kentucky HousingIQ Realtors

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February 8, 2022: Mortgage interest rates continue to climb https://johnhesch.com/february-8-2022-mortgage-interest-rates-continue-to-climb/ Tue, 08 Feb 2022 14:00:00 +0000 https://johnhesch.com/february-8-2022-mortgage-interest-rates-continue-to-climb/ Jim Lane/Getty A number of mortgage rates jumped today to their highest levels since the start of 2020, including 15-year and 30-year fixed mortgage rates. We also saw a significant rise in the average 5/1 adjustable rate mortgage rate. Mortgage rates have been quite low over the past period, making it a good time for […]]]>

Jim Lane/Getty

A number of mortgage rates jumped today to their highest levels since the start of 2020, including 15-year and 30-year fixed mortgage rates. We also saw a significant rise in the average 5/1 adjustable rate mortgage rate. Mortgage rates have been quite low over the past period, making it a good time for potential buyers to lock in a fixed rate. But rates are dynamic and should continue to rise. Before buying a home, remember to consider your personal needs and financial situation, and speak with several lenders to find the best one for you.

30 Year Fixed Rate Mortgages

The average 30-year fixed mortgage rate is 3.93%, up 15 basis points from seven days ago. (One basis point equals 0.01%.) The most commonly used loan term is a 30-year fixed mortgage. A 30 year fixed rate mortgage will usually have a lower monthly payment than a 15 year one, but usually a higher interest rate. You won’t be able to pay off your home as quickly and you’ll pay more interest over time, but a 30-year fixed rate mortgage is a good option if you’re looking to minimize your monthly payment.

15-year fixed rate mortgages

The average rate for a 15-year fixed mortgage is 3.28%, an increase of 10 basis points compared to the same period last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a higher monthly payment. But a 15-year loan will usually be the best deal, if you can afford the monthly payments. You will most likely get a lower interest rate and pay less interest in total because you are paying off your mortgage much faster.

5/1 Adjustable Rate Mortgages

A 5/1 ARM has an average rate of 3.95%, up 18 basis points from a week ago. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 variable rate mortgage in the first five years of the mortgage. However, changes in the market may cause your interest rate to increase after this period, as stated in the terms of your loan. If you plan to sell or refinance your home before the rate changes, an ARM might be right for you. Otherwise, market fluctuations mean that your interest rate may be significantly higher once the rate is adjusted.

Mortgage Rate Trends

While 2022 started off with low mortgage rates, they have recently seen a rise. There are two major factors at play here: rising inflation rates and a growing economy. That said, rates can always go up and down for a variety of reasons. The spread of the omicron, for example, kept rates relatively low throughout December and into the new year. Overall, rates are expected to rise in 2022, notably with the decision of the Federal Reserve to reduce its bond purchases and to increase interest rates.

We use data collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. This table summarizes the average rates offered by lenders nationwide:

Today’s Mortgage Interest Rates

Rates correct as of February 8, 2022.

How to Find Custom Mortgage Rates

You can get a personalized mortgage rate by contacting your local mortgage broker or using an online calculator. In order to find the best home loan, you will need to consider your current goals and finances. Specific mortgage interest rates will vary based on factors such as credit rating, down payment, debt-to-income ratio and loan-to-value ratio. Having a good credit score, a higher down payment, low DTI, low LTV, or any combination of these factors can help you get a lower interest rate. The interest rate isn’t the only factor that affects the cost of your home. Also, be sure to consider other factors such as fees, closing costs, taxes, and discount points. You should speak with a variety of lenders – including local and national banks, credit unions, and online lenders – and a comparison store to find the best mortgage for you.

What is the best loan term?

When choosing a mortgage, you need to consider the length of the loan or the payment schedule. The most common loan terms are 15 and 30 years, although there are also 10, 20 and 40 year mortgages. Mortgages are further divided into fixed rate and variable rate mortgages. For fixed rate mortgages, interest rates are fixed for the term of the loan. Unlike a fixed rate mortgage, an adjustable rate mortgage’s interest rates are only stable for a certain period of time (usually five, seven or 10 years). After that, the rate adjusts annually based on the market rate.

An important factor to consider when choosing between a fixed rate and an adjustable rate mortgage is how long you plan to live in your home. For those planning on staying in a new home for the long term, fixed rate mortgages may be the best option. Fixed rate mortgages offer more stability over time than adjustable rate mortgages, but adjustable rate mortgages can sometimes offer lower interest rates upfront. If you don’t plan to keep your new home for more than three to ten years, an adjustable rate mortgage might get you a better deal. The best loan term is entirely up to your own circumstances and goals, so be sure to consider what’s important to you when choosing a mortgage.

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Rate Rises to Drive More Interest Paid on Average Loans | Newcastle Herald https://johnhesch.com/rate-rises-to-drive-more-interest-paid-on-average-loans-newcastle-herald/ Fri, 04 Feb 2022 19:00:00 +0000 https://johnhesch.com/rate-rises-to-drive-more-interest-paid-on-average-loans-newcastle-herald/ news, business, economy, RateCity, lending, banks, banking, interest rates, inflation, Reserve Bank of Australia Mortgage holders in the Hunter could be forced to shell out an additional $800 in monthly interest payments according to rate hike forecasts from Australia’s biggest banks. Analysis of RateCity’s Big Four cash rate forecasts for Australian Community Media showed borrowers […]]]>

news, business, economy, RateCity, lending, banks, banking, interest rates, inflation, Reserve Bank of Australia

Mortgage holders in the Hunter could be forced to shell out an additional $800 in monthly interest payments according to rate hike forecasts from Australia’s biggest banks. Analysis of RateCity’s Big Four cash rate forecasts for Australian Community Media showed borrowers are set to be stung with hundreds of dollars in additional interest charges, once the Reserve Bank starts raising rates . Calculations are based on the most recent average loan size in each state and territory, with New South Wales set to see the worst potential rate hike, an average mortgage in the most populous state could result in additional fees between $477 and $800. RateCity’s research director, Sally Tindall, stressed that borrowers should build up a savings reserve and stressed that a rise in short-term rates was inevitable. “No one is going to like the idea of ​​putting their hard-earned savings back into their bank as extra interest charges,” Ms Tindall said. “Don’t sit and wait for rates to rise, build up a reserve as soon as you can by putting extra money into your offset or directly into your home loan. The lower your loan amount when the rate goes up, the more the less shock you will have.” By December 2023, Commonwealth Bank expects the RBA to inflate rates to 1.25%, while NAB and Westpac assume the cash rate will hold at 1.5%. ANZ, at the higher end of the spectrum, estimates that the cash rate should rise to 2%, which would result in higher mortgage rates offered by lenders on loans to homeowners and investors. Growing interest has been in focus following speculation from the RBA that a “plausible” rate hike could occur later in the year. Higher-than-expected levels of inflation above the RBA’s 2-3% target range led the market to believe a rally could come as early as August. Earlier RBA action was also announced after the US Federal Reserve announced it could raise rates as early as March. However, RBA Governor Philip Lowe quashed the speculation, pointing out that US inflation was double Australia’s. The Big Four’s longer-term rate forecasts also show that the peak rate by 2024 could be between 1.75% and 3%. Ms Tindall noted that the RBA is aware of rising debt levels due to the housing boom which has seen values ​​rise by more than 25% over the year. “Over the next two years, the cash rate is expected to be between 1.25 and 2%, which is historically still incredibly low,” she said. According to the Australian Prudential Regulation Authority, household savings are at an all-time high, with nearly $119 billion more in savings accounts than a year ago. IN THE NEWS: Our reporters work hard to bring local, up-to-date information to the community. Here’s how you can continue to access our trusted content:

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How the interest rate affects your savings account https://johnhesch.com/how-the-interest-rate-affects-your-savings-account/ Mon, 24 Jan 2022 12:06:22 +0000 https://johnhesch.com/how-the-interest-rate-affects-your-savings-account/ Bank / Savings Account /Getty Images/iStockphoto If you have a savings account, you’re likely getting a barely noticeable return of 0.06% interest, which is the national average, according to the FDIC. That’s a far cry from 1980, at the height of the so-called Great Inflation, when three-month CD yields approached 20%. In fact, savings accounts […]]]>

/Getty Images/iStockphoto

If you have a savings account, you’re likely getting a barely noticeable return of 0.06% interest, which is the national average, according to the FDIC. That’s a far cry from 1980, at the height of the so-called Great Inflation, when three-month CD yields approached 20%. In fact, savings accounts have provided such paltry returns for so long that they were losing money to rising prices long before inflation took off in 2021.

Why? For the same reason that mortgages have been at or near record highs for months — the almighty interest rate.

See: Bank accounts that will help you supplement and develop your social security
Check Out: Learn About GOBankingRates’ Best Checking Accounts of 2022

Interest rates determine what the bank charges you and what you charge the bank

Interest is the fee you pay to borrow money or the payment you get when you lend it. It is calculated as a percentage of the principal, called the rate. You may notice that you have many interest rates in your financial life, such as:

  • A mortgage
  • A car loan
  • A student loan
  • Credit card
  • A payday loan

The other side of the coin is the interest you earn for lending money to the bank, which is what you do when you deposit money in a savings account. That’s almost certain to be the lowest interest rate of your entire financial life – unless you have an interest check, which pays even less than six hundredths of a percent.

In short, banks have all the money because they charge high interest rates for the money they lend and pay low interest rates on the money they borrow.

GOBankingRates’ Top Picks: The Best Regional Banks of 2022

Who sets interest rates?

All of these different rates associated with all of these different types of loans are based on a single rate set by a group of 12 bankers and monetary policymakers who make up the Federal Open Market Committee (FOMC).

The FOMC meets several times a year to determine what the federal funds rate should be. When the FOMC wants to reduce the money supply, it raises the interest rate to discourage borrowing and attract deposits. When he wants to increase the money supply, he lowers the rates. The federal funds rate determines the prime rate, which is the lowest rate that banks charge other banks for overnight loans.

When the FOMC increases the federal funds rate, the prime rate increases. When the prime rate rises, interest rates on loans – and, in theory, deposits in savings accounts – rise with it. When the FOMC lowers the rate, it becomes cheaper to borrow money, but the return you collect in your savings account decreases.

Learn more about interest rates: how interest rates affect your portfolio and the economy as a whole

Higher interest rates mean more money in your savings account

Your savings account is based on the money-growing power of compound interest, allowing you to earn interest on the interest your original money has already earned. One month’s interest is added to your balance, and that sum earns even more interest the next month, and so on.

You can use an investment calculator from Investor.gov to see how your savings account will grow more than the sum of your contributions over time.

Let’s say you started with an initial investment of $1,000 and contributed $100 per month for 10 years at 1% interest. After a decade you would have contributed $13,000, but you would have $13,725.25 in your savings account – the difference comes from the interest you earned from the bank for lending it the money as a deposit .

As Discover points out, 0.01% interest — what you’ll get with the worst savings accounts — would earn you 50 cents on a $5,000 deposit over the course of a year. The same deposit in the same year with an interest rate of 1%, on the other hand, would earn you $50.53.

Important: 25 things you should never do with your money

So when the FOMC raises rates, savings accounts pay higher returns?

The trade-off with interest is that when rates go up, you pay more to borrow money, but earn more from savings vehicles like CDs, money market accounts, and savings accounts — in theory. . In reality, the FOMC is not the only force pushing interest rates up or down. Individual lenders have wide discretion and routinely charge different borrowers different rates based on their credit history and all sorts of other factors.

They also determine what they’re willing to pay for deposits — and while your savings account’s APY should go up when the FOMC raises its own rate, that doesn’t always happen. You might notice, for example, that last year’s record mortgage rates rose slightly when interest rates rose, but your savings account held firm no matter how sad it was. pays you.

Indeed, the financial sector is not immune to the laws of supply and demand.

According to Credit Karma, banks currently have so much cash that they simply don’t need your deposits enough to pay more. Therefore, unlike in 1980, it is a banking market that allows lenders to charge more for loans when the prime rate rises without increasing the APY they pay into their savings accounts.

So for now, plan for your emergency fund to keep losing money to inflation while you “save” money in an account that earns you six hundredths more than what you he would win if you stuff him under your mattress.

More from GOBankingRates

About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was previously one of the youngest nationally distributed columnists for the nation’s largest newspaper syndicate, the Gannett News Service. He worked as a business editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as an editor for TheStreet.com, a financial publication at the heart of New York’s Wall Street investment community. .

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Home loan interest rate reduction, infra upgrades could make PM housing for all a reality https://johnhesch.com/home-loan-interest-rate-reduction-infra-upgrades-could-make-pm-housing-for-all-a-reality/ Fri, 21 Jan 2022 08:01:48 +0000 https://johnhesch.com/home-loan-interest-rate-reduction-infra-upgrades-could-make-pm-housing-for-all-a-reality/ Union Budget 2022-23: Among the direct benefits, the 2022 budget could bring potential relief to direct home buyers with an increased limit of interest deduction on home loans for tax refund from Rs 2 lakh to Rs 5 lakh Indian Union Budget 2022: Interest reduction on home loans could give PMAY a boost. Reuters With […]]]>

Union Budget 2022-23: Among the direct benefits, the 2022 budget could bring potential relief to direct home buyers with an increased limit of interest deduction on home loans for tax refund from Rs 2 lakh to Rs 5 lakh

Indian Union Budget 2022: Interest reduction on home loans could give PMAY a boost. Reuters

With the EU budget fast approaching, expectations from all sectors are on the rise. With economic advisers expecting India’s growth to be between 7% and 7.5%, the government will mainly focus on crafting a growth plan to lift the economy out of recession. COVID-19 crisis. The nation foresees a greater focus on the development of healthcare, infrastructure, affordable housing, MSMEs, startups and innovations.

The last two years have been marked by great pressure on all sectors; however, the residential finance and real estate sectors saw a larger drop with lower demand and lower investment. Although the sector is now accelerating with the top eight cities claiming near pre-pandemic era market share, individuals, investors and the entire industry are eagerly awaiting higher support from this budget. of the Union, to continue this growth.

Speculation is that the government will bolster the affordable and rental housing agenda with a strong roadmap to enable the sector to be ready for the future.

The litigation over mortgage tax reduction and increase in allowance to the Ministry of Housing and Urban Affairs by Rs 54,581 crore, was one of the biggest successes of the 2021 budget. expected proposals such as interest deduction on mortgage rates, infrastructure upgrades and increased capitalization of real estate, monetization of additional income to build higher assets, etc., will propel the Prime Minister Narendra Modi’s vision of housing for all under Pradhan Mantri Awas Yojana (PMAY) and strengthen the existing financing system.

Boost for buyers and investors

Among the direct benefits, the 2022 budget could bring potential relief to direct home buyers with an increased limit of home loan interest deduction for tax refund from Rs 2 lakh to Rs 5 lakh. In addition, personal tax relief, either with tax cuts or with a review of tax slaps, could support the sector with increased demands since the last increase in the deduction limit in 2014.

Buyers will furthermore look forward to responding to industry demands with ease of financing and GST rate reductions. If these expectations are met in the next budget, it will improve taxpayers’ disposable income and lead to consistent growth for the sector.

Maintain industry support

According to the Ministry of Housing and Urban Poverty Alleviation, affordable housing is defined by the size of the property, its price and the income of the buyer. In the next fiscal year, the government may also consider redefining the affordable housing criteria to extend the benefits of the additional deduction to a wider market.

Also, if the government extends the deadline for public housing projects with the added benefits of reduced stamp duty, reduced long-term capital gains tax for real estate, of an extension of the CLSS scheme under the PMAY for Middle Income Groups (MIGs) and unlocking more government-controlled land, this will allow industry to use the allocated funds and make the process more sustainable. more convenient purchase.

The author is CEO, Reliance Home Finance.

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