mortgage

Sharing Your Credit Card Balances Can Lower Your Mortgage Rates

March 1, 2007

Typically, higher credit scores get lower mortgage rates and access to a wider array of mortgage products. Extent of Indebtedness comprises 30% of a credit score and is the second largest component in the credit scoring model.  In plain-speak, Extent of Indebtedness is: “How close is this person to maxing out his cards?” The ideal […]

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What’s Bad For Stocks Can Be Good For Rates

February 28, 2007

After the most major meltdown in U.S. stock trading since September 17, 2001, markets appear to be recovering this morning. This should reverse the drop in mortgage rates we saw towards the end of the day yesterday. To understand why mortgage rates go down when stock markets suddenly fall, we must look at the investor’s […]

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More “Safe Haven” Buying Drops Mortgage Rates

February 27, 2007

The Flight-to-Quality continues in the bond markets. Iran said today that the suspension of its uranium enrichment program “will never happen”, fueling speculation that an international stand-off is pending.  The United States has sent additional aircraft carriers to the Gulf in response. Normally, this action is enough to frighten markets into bonds by itself, but […]

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The Week In Review (February 26, 2007) : What To Watch For

February 26, 2007

Aside from CPI, last week was quiet on the economic data front.  Traders used the week to catch their breath and look around a bit at market conditions.  They liked what they saw and strong demand for bonds pushed mortgage rates down. This week, the big Market Mover Day is Thursday, coinciding with the release […]

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How Iran’s Uranium Enrichment Program Changes Mortgage Rates

February 23, 2007

In defiance of the UN Security Council, Iran is taking another step towards successfully building a nuclear weapon. Yesterday, it was reported by the International Atomic Energy Agency that Iran expanded its ability to create nuclear weapons and that it plans to “turn on” at least 1,000 uranium-enrichment centrifuges. Internationally, this decision creates questions (and fears) about […]

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CPI Is Higher And Contained In Comfort Range

February 21, 2007

Markets did not like today’s Consumer Price Index figures which came in higher than expected.  However, the downbeat mood this morning is not enough to reverse the recent downward trend in mortgage rates. The chart at right shows CPI over the past two years and the band collars the Fed’s articulated “comfort zone” for inflation. […]

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The Week In Review (February 19, 2007) : What To Watch For

February 19, 2007

Fed Chairman Ben Bernanke carried the biggest stick in the mortgage rate market last week.  His “Goldilocks” testimony before the Senate Banking Committee spoke of favorable growth and subsiding inflation. Markets expected a harsher tone from Bearded Ben and that is why rates dropped post-testimony — the expectation diminished that the Fed will raise the […]

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Why Long-Term Mortgage Rates Are The Same As Short-Term Mortgage Rates

February 16, 2007

Interest rates are currently inverted, a market situation in which the longer you commit to lending your money, the less your return on investment.  It’s counter-intuitive so let’s delve a little deeper. Imagine if a friend asked you to borrow money for two years and you charged him interest on that money.  There are some […]

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Why Nations Care What Ben Bernanke Says To The U.S. Congress

February 15, 2007

The markets continue to show their appreciation for Fed Chairman Bernanke’s testimony yesterday and mortgage rates are falling in response. So, why do the Chairman’s words hold such sway over global markets?  Simple.  Buying and selling U.S. dollar-denominated securities is an integral part of central banking fiscal management policies worldwide.  When the Chairman says that […]

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Markets React To Bernanke’s Testimony

February 14, 2007

Addressing the Senate Banking Committee this morning, Fed Chairman Ben Bernanke gave the speech that most people expected: The current monetary policy (read: Fed Funds Rate) is at a level that both sustains economic growth, and tempers inflation pressures. In addition, inflation expectations “appear to have remain contained,” Bernanke said.  He called that “encouraging” and […]

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North Korea Stops Making Plutonium, But Will Markets Believe Them?

February 13, 2007

North Korea agreed to shutter its main source of plutonium today in exchange for energy and food considerations after months of negotiations with the United States and other countries.  The agreement did not specifically address the disarmament of existing nuclear weapons. News like this is a mixed bag for mortgage rate shoppers based on how […]

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The Week In Review (February 12, 2007) : What To Watch For

February 12, 2007

Despite the dearth of economic news last week, mortgage rates staged somewhat of a rally.  By the time the week ended. mortgage rates had retreated by half of the prior week’s major run-up.  The week was not without fireworks, however.  In prepared remarks, Dallas Fed President Fisher dropped a hint about future Fed rate hikes […]

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England and Europe Impact Domestic Mortgage Rates

February 8, 2007

The Bank of England and the European Central Bank left their benchmark lending rates unchanged today.  Both alluded, however, to the need for future rate increases and these policies can have a direct impact on domestic mortgage rates. When strong governments issue debt (i.e. bonds), it is “guaranteed money” and, therefore, risk-free.  When nations with […]

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The Two Methods To Generate Home Equity Are Not Equal

February 6, 2007

Home equity is created in one of two ways (assuming increasing home value and a non-negatively amortizing first mortgage). In the first method of creating equity, the homeowner pays down the principal balance on the mortgage.  This increases the difference between what is owed on the home and what the home is worth. In the […]

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The Week In Review (February 5, 2007) : What To Watch For

February 5, 2007

Last week was not for the weak-hearted as mortgage rates bounced around like a fumbled Super Bowl football.  In a widely-expected move, the Federal Reserve held the Fed Funds Rate at 5.25% for the fifth consecutive meeting, stating that growth is “moderate” and that inflation pressures may be subsiding. Consumer spending represents two-thirds of the […]

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Upward Revisions Keeps Weak Job Data From Moving Rates

February 2, 2007

This morning’s Non-Farm Payrolls report showed that 111,000 new jobs were created in January, short of Wall Street’s 155,000 expectations.  The weaker-than-expected figure did not give mortgage markets a reason to rally, however, because December’s figures were revised higher by 39,000 and November’s by 42,000. Traders have shrugged off the data for three major reasons: […]

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The Fed Says: Housing Shows Signs of Stabilization

February 1, 2007

The FOMC left the Fed Funds Rate at 5.250% yesterday, signaling controlled growth in the months ahead.  Most notable was the press release’s inclusion of “tentative signs of stabilization” with respect to the housing market and the removal of references to high energy prices. Because the FFR did not change, the FFR-derived Prime Rate also […]

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It’s Not What They Do, It’s What They Say

January 31, 2007

It’s all eyes on the Fed today as the market sits patiently, waiting for the 2:15 P.M. EST press release.  Despite strong 2006 Q4 growth figures and a five percent spike in oil prices yesterday, there is an eerie calm while markets wait for the FOMC’s press release. In its December 2006 press release, the […]

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The Market Stops To Catch Its Breath

January 30, 2007

60 days ago, markets put a 36% probability that the Fed would lower the Fed Funds Rate by March 2007.  Today, that probability is zero.  If you’re wondering why mortgage rates have ascended so quickly, that’s part of your answer — inflation expectations are changing. Rates increased again on Monday and today the market catches […]

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The Week In Review (January 29, 2007) : What To Watch For

January 29, 2007

After a week of bludgeoning in which mortgage rates rose as much as 0.50% on the heels of a supposed housing sector rebound, don’t expect the fireworks to stop anytime soon. This Monday and Tuesday will be quiet with respect to economic releases, but Wednesday through Friday will be jammed-packed with mortgage-rate-moving data. The highlights […]

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