Today's Rates 

 “What is your rate,” you ask?  Mortgage rates are subject to change at any time and without advance notice.  They are posted daily and usually stay the same for anywhere from a day to a couple of days but occasionally change mid-day due to evolving conditions in the financial markets.  During times when the financial markets are volatile rates may even change two or three times during the course of a single day.  Mortgage interest rates  take their direction specifically from the changing yield requirements in the long term credit markets.  Different types of investments compete with each other in the nation’s capital markets for available money.  Thus, a good day in the equities (or stock) markets may pull money out of the credit (or bond) markets, which includes mortgage-backed securities.  This slow down of money moving into the long term credit markets could make long term bond prices decline which would cause the fixed rate of return on these instruments to increase as a percentage of the price paid for the instrument.  That would cause mortgage yields to increase.   

Because investors in mortgages may have to live with a fixed  rate of return for up to thirty years these securities are very sensitive to expectations of future inflation, which would erode away the real rate of return.  Thirty years is a long time and a lot of unforeseen things can come about during that time.  That is why changes in short term rates, such as those controlled by the Federal Reserve, do not always affect long term mortgage rates in a “lock-step” manner.  Sometimes mortgage rates move in the same direction as short term rates but not to the same degree.  At other times, mortgage rates move in the opposite direction as short term rates.  The correlation between these short term and long term rates depends on everything that’s going on in the financial markets and hindsight is always more accurate than foresight in predicting these things.  No one knows in advance what the financial markets are going to do.  Most people have an opinion and every time some opinions are right and some opinions are wrong.  Who is right and who is wrong is only partly dependent on knowledge and insight.  Just as in a game of  cards or dominoes, your fortune depends not only on your ability to play your hand but on what you are dealt as well! 

Neighborhood Mortgage Center is a lender with about one hundred institutional investors to whom we can sell mortgages.  On a typical day, by fax and e-mail,  we will get between fifty to one hundred thousand individual quotes on mortgage interest rates (thank heaven for technology!).  Other things can impact the rate assigned to any one loan such as periodic changes in underwriting guidelines or receipt of documentation different from information thought to be accurate at the time of application.

It should be apparent why a loan officer’s answer to the question “what is the interest rate today” seems sometimes reluctant and guarded, particularly if the loan officer has just begun a conversation with a potential borrower and knows little about their individual circumstances, history and goals at the time this question is presented.  Because there are so many variables affecting the interest rate assigned to any one loan application, applicants should be leery of any individual who is too quick to offer an answer to the question “what is the interest rate” without first obtaining enough information to make a reasonably accurate response.  This is why only seasoned, experienced professionals are allowed to work at Neighborhood Mortgage Center.  A Neighborhood Mortgage Center loan officer will be happy to give you a range of current rates typical for the type of loan you are interested in or a specific quote based on an analysis of your goals, history and circumstances.