Mortgage Report and Market Update

Crystal Ball Anyone?

We don’t have a crystal ball but we like to pretend as if we do! 

Mortgage rates are not going anywhere, neither down nor up, at least not in a near future, well depending on how you define the near future.  Assuming the swings in interest rates in either direction be an eighth to quarte of a percent (.125% to .25%), the change in the interest payment for an 1/8 change in interest on $100,000 mortgage is $6.65.  Even if it is double that amount, it will be $13.30.

For a loan amount of $500,000 that change would amount to $65 change in payment either up or down. 

In So Cal, $65 doesn’t even cover a fancy dinner for two. Knowing it takes about $8000 a month income to qualify for a $500k mortgage, $65 is a just a drop in the bucket for most people. From that perspective, I would say we don’t expect much of a change in interest rates.

Looking at it from a different perspective, every penny counts, we should spend our money wisely and not give it away to the mortgage lenders if we don’t have to.  That said, if you have not taken advantage of the historically low rate, it’s time to do it now. Although the rates may not be going anywhere, our crystal ball tells me the lending guidelines may get tighter in the coming months and years. I leave it up to the readers to speculate why.