Renting

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The Federal Reserve’s preferred measure of underlying U.S. inflation decelerated in May, bolstering the case for lower interest rates later this year.

The so-called core personal consumption expenditures price index, which strips out volatile food and energy items, increased 0.1% from the prior month. That marked the smallest advance in six months. On an unrounded basis, it was up just 0.08%, the least since November 2020.

From a year ago, it rose 2.6%, the least since early 2021, according to Bureau of Economic Analysis data out Friday. Inflation-adjusted consumer spending posted a solid advance after a pullback in April, driven by goods and fueled in part by a jump in incomes.

The report offers welcome news for Fed officials seeking to commence with rate cuts in the coming months, though policymakers will likely want to see additional reports like this one first. They recently dialed back their projections for rate cuts this year following worse-than-expected inflation data in the first quarter.

“The deflation in goods prices and weakness we are starting to see at least gets us a path to a possible September cut,” said KPMG Chief Economist Diane Swonk.

Central bankers pay close attention to services inflation excluding housing and energy, which tends to be more sticky. That metric increased 0.1% in May from the prior month, according to the BEA, the least since October.

Household demand has so far remained resilient even as borrowing costs have taken a toll on some sectors of the economy. The report showed inflation-adjusted outlays for services rose 0.1%, driven by airfares and health care. Spending on merchandise advanced 0.6%, led by computer software and vehicles.

Despite some signs of cooling in the labor market, solid wage growth continues to power consumer spending. Wages and salaries rose 0.7%. On an inflation-adjusted basis, real disposable income jumped 0.5%, the most since January 2023, after a flat reading in April.

The saving rate rose to 3.9%, the highest level since the start of the year.

A monthly government report on employment, due July 5, will offer the latest insight on how income growth is holding up.

Source: nationalmortgagenews.com

Apache is functioning normally

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Mortgage rates inched down again this week and are the lowest they’ve been since the first week of April, according to Freddie Mac. Average 30-year mortgage rates were 6.86% this week, a single basis point decrease from the week before.

“The 30-year fixed-rate mortgage continues to trend down, hitting the lowest level in almost three months,” Sam Khater, Freddie Mac’s chief economist, said in a press release. “By historical standards, the economy is in good shape, and we expect rates to continue to come down over the summer months, bringing additional homebuyers back into the market.”

Mortgage rates are still relatively high overall, keeping many would-be homebuyers out of the market. Rates are expected to trend down throughout the remainder of 2024 and beyond, but if you don’t want to wait for rates to drop, you can lessen the impact of today’s high rates by getting quotes from multiple mortgage lenders. This will help you find the lowest rate available, saving you money in the long term.

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Today’s refinance rates

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Mortgage Calculator

Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments:

Mortgage Calculator

$1,161
Your estimated monthly payment

Total paid$418,177
Principal paid$275,520
Interest paid$42,657
  • Paying a 25% higher down payment would save you $8,916.08 on interest charges
  • Lowering the interest rate by 1% would save you $51,562.03
  • Paying an additional $500 each month would reduce the loan length by 146 months

By clicking on “More details,” you’ll also see how much you’ll pay over the entire length of your mortgage, including how much goes toward the principal vs. interest.

Mortgage Rate Projection for 2024

Mortgage rates started ticking up from historic lows in the second half of 2021 and increased dramatically in 2022 and throughout most of 2023.

Many forecasts expect rates to fall this year now that inflation has been coming down. In the last 12 months, the Consumer Price Index rose by 3.3%. This is a significant slowdown compared when it peaked at 9.1% in 2022, but we’ll likely need to see more slowing before rates can drop substantially.

For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease. Check out some of our best HELOC lenders to start your search for the right loan for you.

A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you’re borrowing in a lump sum. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you’d do with a cash-out refinance.

Current HELOC rates are relatively low compared to other loan options, including credit cards and personal loans. 

When Will House Prices Come Down?

We aren’t likely to see home prices drop this year. In fact, they’ll probably rise.

Fannie Mae researchers expect prices to increase 4.8% in 2024 and 1.5% in 2025, while the Mortgage Bankers Association expects a 4.5% increase in 2024 and a 3.3% increase in 2024.

Sky high mortgage rates have pushed many hopeful buyers out of the market, slowing homebuying demand and putting downward pressure on home prices. But rates have since eased, removing some of that pressure. The current supply of homes is also historically low, which will likely push prices up.

What Happens to House Prices in a Recession?

House prices usually drop during a recession, but not always. When it does happen, it’s generally because fewer people can afford to purchase homes, and the low demand forces sellers to lower their prices.

How Much Mortgage Can I Afford?

A mortgage calculator like the one above can help you determine how much house you can afford. Play around with different home prices and down payment amounts to see how much your monthly payment could be, and think about how that fits in with your overall budget.

Typically, experts recommend spending no more than 28% of your gross monthly income on housing expenses. This means your entire monthly mortgage payment, including taxes and insurance, shouldn’t exceed 28% of your pre-tax monthly income.

The lower your rate, the more you’ll be able to borrow, so shop around and get preapproved with multiple mortgage lenders to see who can offer you the best rate. But remember not to borrow more than what your budget can comfortably handle.

Molly Grace

Mortgage Reporter

Source: businessinsider.com

Apache is functioning normally

Ginnie Mae has released a term sheet for its revised Home Equity Conversion Mortgage securitization program, starting a comment period that ends on July 31.

With the update, termed HMBS 2.0, Ginnie Mae wants to enhance liquidity for issuers by allowing the re-pooling of active and non-active buyouts into new custom, single-issuer pools.

HECMs are reverse mortgages insured by the Federal Housing Administration. Unlike Fannie Mae or Freddie Mac, which purchase and securitize mortgages, Ginnie Mae is merely a secondary market guarantor for government agency products.

Ginnie Mae first put out a guide for HECM mortgage-backed securities issuances in July 2007, with the initial deal coming out in November of that year.

Under current HMBS rules, when a reverse mortgage reaches 98% of the FHA maximum claim amount, the issuer must purchase it out of the pool. At that time, it can be assigned to FHA, which takes over servicing the loan and disburses funds to the lender.

But issuer liquidity during the process can be a problem, a Ginnie Mae blog post said, adding “one of the largest HECM issuers became insolvent in early 2022 when interest rates spiked and liquidity dried up.” While it didn’t specify the lender and the dates don’t quite add up, Reverse Mortgage Funding filed for bankruptcy in November of that year because of liquidity issues.

Furthermore, as interest rates increased last year, HECM originations slowed. At the same time existing loans reached that 98% limit.

“This confluence of factors creates significant liquidity needs for the industry,” the blog said. “Unless addressed proactively, this can lead to future disruption in the HECM market.”

The market appears to have picked up as of late, with 2,460 FHA reverse mortgage endorsements in May, according to Reverse Market Insight. That was up nearly 17% from April’s 2,150 and 20% compared with May 2023, when 2,051 HECMs were endorsed.

Meanwhile, homeowners 62 and older saw their housing wealth increase to $13.19 billion during the first quarter, up by $328.5 billion, the National Reverse Mortgage Lenders Association said.

Senior home values increased to an all-time high of $15.5 trillion during the period but that was offset by an increase in debt from $10.2 billion to $2.35 trillion, the NRMLA/RiskSpan Reverse Mortgage Market Index reported.

Under Ginnie’s proposal, the weighted average principal balance in an HMBS 2.0 will be limited to 95%. That buffer is needed to provide an economic incentive to protect Ginnie Mae, and ultimately taxpayers, against a decline in home values.

Multiple valuation methods will be permitted. These include automated valuation models and broker price opinions. However, a 10% haircut will be applied in order to protect Ginnie Mae from home-price declines.

Under the proposal, the repurchase rule will kick in at 150% of MCA, or when the mortgage is assigned to the Department of Housing of Urban Development or the note is terminated, whichever comes first.

“Soliciting public comment on the structure of the HMBS 2.0 program is critical to developing a program that supports Issuer liquidity while protecting taxpayers,” said Ginnie Mae Acting President Sam Valverde, in a press release. “Ginnie Mae remains committed to supporting the government reverse mortgage market and we will work swiftly to address input received as we work to implement the program.”

Source: nationalmortgagenews.com

Apache is functioning normally

What to Make of Week’s Weakest Levels After Solid PCE Data

By:
Matthew Graham

Fri, Jun 28 2024, 3:34 PM

What to Make of Week’s Weakest Levels After Solid PCE Data

Things looked good for the bond market earlier this morning.  While yields were still quite a bit higher than those seen earlier in the week, there was an immediate, positive response to the on-target PCE data.  The gains didn’t last long with sellers running the table mostly between 10am and 11am ET.  While some of the move could be due to traders moving to the sidelines ahead of near-term potential political developments, month/quarter-end positioning likely had a much bigger impact.  Bonds ended the week at their weakest levels, but this pull-back doesn’t inform next week’s trading in the slightest.  That honor goes to the active slate of bigger ticket economic data.

    • Core M/M PCE
      • 0.1 vs 0.1 f’cast
      • last month revised to 0.3 from 0.2
    • Core Y/Y PCE
      • 2.6 vs 2.6 f’cast

08:39 AM

slightly weaker overnight and slightly stronger after data.  MBS up 6 ticks (.19) and 10yr down 2bps at 4.267

11:08 AM

Tanking now.  10yr up 5.3bps at 4.34.  MBS down an eighth  on the day and a quarter point from rate sheets.

03:04 PM

Still near weakest levels.  10yr up 6bps at 4.346 and MBS down 6 ticks (.19).

 Download our mobile app to get alerts for MBS Commentary and streaming MBS and Treasury prices.

Source: mortgagenewsdaily.com

Apache is functioning normally

It’s been an odd morning for the bond market, but not in an objectionable way.  In not so many words, bonds are rallying somewhat nicely despite an absence of obviously compelling data.  We can make a case for it, but it takes some doing due to the sheer amount of 8:30am line items.  Those can be whittled down by removing the stale Q1 numbers (GDP, PCE, corp profits, etc).  Of the remaining reports, only Durable Goods emerges as a solid scapegoat.  Headline readings remain low and the “core” (excluding defense and aircraft) was much lower than expected.  Even so, the rally is a bit bigger than we’d expect, but we’re not complaining. 

At this time of month, we can always consider the month/quarter-end trading environment, which can cause relatively big swings regardless of data.  But if that were this morning’s x factor, it’s extremely unlikely that the movement and volume would be substantially concentrated at the 8:30am mark (when all the data came out).

Source: mortgagenewsdaily.com

Apache is functioning normally

HSBC has joined two other major lenders in reducing mortgage rates following hints of a summer base rate cut by the Bank of England.

Barclays cut the cost of its fixed-rate home loans for new deals on Tuesday, following an earlier move by NatWest.

HSBC’s cuts will come into effect on Wednesday, with brokers expecting more mortgage companies to follow suit.

However, these reductions are small in the wider context. Borrowers still face relatively high costs, with many paying significantly more in monthly repayments when current cheaper deals expire.

Average mortgage rates had been creeping up, driven by a lack of fresh competition between lenders during the election campaign.

The average rate on a two-year fixed deal stands at 5.96% according to the financial information service Moneyfacts. It said the average five-year deal had a rate of 5.53%.

“These moves [by HSBC and others] suggest that the recent edging up in rates is now unwinding and most cuts are being made in small steps,” said David Hollingworth, from broker L&C.

The interest rate on a fixed mortgage does not change until the deal expires, usually after two or five years, and a new one is chosen to replace it. Doing nothing would leave people on a variable rate, which can be very expensive.

About 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year.

Although spring tends to bring more activity in the housing market, this may have been dampened as potential buyers wait for more political certainty.

Borrowers will also be watching for whether the Bank of England’s Monetary Policy Committee (MPC), which sets interest rates, opts for a cut at its next meeting on 1 August.

At the most recent meeting last week, there was a significant change in tone indicating a majority could vote for one.

Optimism about such an outcome may have led to the latest moves by major lenders. The banks may also be jostling for custom.

Andrew Montlake, from mortgage broker Coreco, said: “Lenders will be keen to kickstart a market lethargic from the election, hot weather and football.

“The country desperately needs the boost of a cut to relieve some of the financial pressures that have held back the economy and put borrowers under immense pressure.”

However, he said positive news about falling inflation may only be temporary, and could lead to more caution from the Bank.

Michelle Lawson, from Lawson Financial, said borrowers were “beleaguered” but more lenders could cut rates in the coming days.

Separate figures published on Tuesday by UK Finance, which represents lenders, showed a further drop in the number of people paying only the interest on their home loan, despite the tough current conditions for borrowers.

Source: bbc.com

Apache is functioning normally

Prospective Homebuyers Get Little Respite As Mortgage Rates Expected To Plateau, Freddie Mac Predicts

Prospective homebuyers hoping for a significant drop in mortgage rates this year might need to recalibrate their expectations.

Freddie Mac’s U.S. Economic, Housing and Mortgage Market Outlook report for June forecasts that rates will hover above 6.5% through the end of the year amid persistent inflation, despite an anticipated Federal Reserve rate cut. Currently, the average 30-year fixed rate is 6.87%.

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“Mortgage rates have been volatile over the past month, fluctuating between 6.9% and 7.2%; they remain relatively high, deterring home sales,” the report stated. “Despite robust housing demand driven by first-time homebuyers, we expect home sales to remain muted.”

Sales of existing homes fell 0.7% in May to a seasonally adjusted annual rate of 4.11 million, marking a 2.8% decrease from the previous year, according to data from the National Association of Realtors (NAR) released last week. The median existing-home sales price surged to a record $419,300, up 5.8% from May last year, marking the eleventh consecutive month of year-over-year price gains.

This price increase has led to a growth in the inventory of unsold homes, which rose 6.7% from April to 1.28 million — a 3.7-month supply at the current sales pace.

Trending: This real estate fund backed by Uber CEO Dara Khosrowshahi gives you instant access to a portfolio of rental properties, and you only need $100 to get started.

“Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months,” said Lawrence Yun, Chief Economist at NAR. “Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions.”

As noted in Freddie Mac’s report, the mortgage market is currently dominated by first-time homebuyers, while existing homeowners with low mortgage rates from previous years are disincentivized to sell their homes.

The lack of movement from trade-up buyers, who typically help create a healthy churn in the housing market by selling entry-level homes and moving to higher-value properties, is adding to the broader stagnation in the market. With potential sellers staying put, new listings are scarce, and the construction of new homes isn’t keeping pace with demand, further straining the market.

Freddie Mac projects that unless there’s a sharp and sustained drop in mortgage rates or a boost in new construction, the tight inventory and high prices will continue to dominate the market landscape, perhaps through 2025.

While the expected rate cut might provide some comfort, its practical effects on improving market accessibility and affordability may be limited. “Given persistent inflation, achieving rates below 6.5% is challenging. Our forecast suggests a modest increase in total origination volumes this year and next, primarily driven by home prices,” the report said.

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This article Prospective Homebuyers Get Little Respite As Mortgage Rates Expected To Plateau, Freddie Mac Predicts originally appeared on Benzinga.com

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Source: finance.yahoo.com

Apache is functioning normally

They say to never say never. But why?

Because if you say it, whatever you said would never happen typically happens. Go figure.

Well, speaking of, Fannie Mae chief economist Doug Duncan recently said barring a “catastrophic economic event,” not to expect mortgage rates to return to 3% in our lifetimes.

I wrote about it on Twitter and it garnered a big reaction, with most saying he’s right. And others asking how old he was…

My take was that when I hear things like “not in our lifetime,” I naturally expect them to occur sooner rather than later.

How Did We Get 3% Mortgage Rates to Begin With?

Before we talk about the possibility of mortgage rates being 3% again, let’s discuss how they got there in the first place.

After the early 2000s mortgage crisis led to the Great Recession between 2007 and 2009, the Fed took action to lower its own lending rate (the federal funds rate) to nearly zero.

This was done to increase economic output by encouraging banks to lend money and for consumers and businesses to take out loans.

Despite the Fed’s best efforts, the economy continued to contract, leading to the advent of an unconventional monetary policy called Quantitative Easing, or QE.

Without getting too wordy here, the Fed began buying long-dated treasuries and mortgage-backed securities (MBS) to stimulate lending and turn the economy around.

Thanks to a very large, new buyer in the market, bond prices went up and their yields (aka interest rates) plummeted, as did consumer mortgage rates.

By the end of 2011, the 30-year fixed fell just below 4%, per Freddie Mac, as seen in the FRED chart above. And in 2012, it was in the low-3% range.

The Fed’s QE program was launched in 2008 and ran all the way until 2020, thanks to COVID-19 requiring an additional round.

Effectively, it was the perfect storm of a zero-interest rate policy (ZIRP) coupled with enormous buying of agency mortgage-backed securities. They currently hold over $2.5 trillion in MBS!

This led to the lowest priced 30-year fixed mortgage on record, and many lucky American homeowners got their hands on one.

Could the Same Thing Happen Again?

Anything is possible, which is why I say never say never. But as Duncan noted, it might take a bit of a catastrophe. Or possibly a major geopolitical event. Or both.

Some wrongly claimed we needed a pandemic to see 3% mortgage rates, but if you study the mortgage rate timeline, that’s simply not true.

As noted, the 30-year fixed was sub-4% all the way back in 2011, nearly a decade before COVID-19 reared its ugly head.

Yes, the pandemic led to even lower mortgage rates, with the 30-year fixed falling to a record low 2.65% during the week ending January 7th, 2021, per Freddie Mac.

But all it took was a Global Financial Crisis (GFC) to get us to 3% mortgage rates. Easy-peasy (kidding).

This isn’t to say it’s right around the corner, but it’s clearly possible. Of course, these might be generational events.

So lifetime might be the wrong word choice here, but generation could be right. As in, not in this generation. But perhaps the next one.

If a generation is around ~30 years, this means many people could see this same thing play out again, though maybe not very soon.

However, things tend to move a lot quicker these days and some argue that we live in a low interest rate world now where a return to double-digit interest rates is unimaginable.

And even long-term average rates could be unthinkable to some given how high home prices are these days.

If you consider the average 30-year fixed mortgage rate over the past 50 years, it’s around current levels of just over 7%.

If we throw out the extreme 1980s mortgage rates, the long-run average is closer to 5.5%. But that includes the crazy low-rate years over the past decade…

How About 4% Mortgage Rates?

While I do agree with Duncan’s general sentiment that a return to a 3% 30-year fixed is unlikely, at least anytime soon, we could get somewhat close.

It wouldn’t shock me to see a 30-year fixed start with a ‘4.’ As in 4.99%, or something to that effect.

Heck, the home builders are still offering special mortgage rate buydowns that low at this very moment.

And if you’re willing to pay discount points at closing, if/when rates moderate as inflation falls, a 4.99% rate could be within reach.

Even without points, rates could get close to those levels if the economy cools rapidly and the Fed begins cutting its own rate again.

Remember, bad economic news is a friend to mortgage rates, so if unemployment spikes, and production/spending declines, rates could come down pretty quick.

At this juncture, many expect the Fed to begin cutting rates as their inflation fight wanes, which if the 10-year bond yield cooperates, could lead to a 30-year fixed closer to 6% by 2025.

And maybe even lower if mortgage rate spreads normalize. This alone could get some borrowers back into the high-5% range without paying a ton at closing.

Of course, that’s all speculation and nobody really knows for certain which way mortgage rates might go.

What Are Your Options If 3% Mortgage Rates Don’t Return?

Even if the 3% mortgage doesn’t return, there are various options to lessen your mortgage interest expense.

For one, there’s always buying down your rate, which involves paying discount points upfront for a lower rate the entire loan term.

This is a form of prepaid interest where you pay more today, but potentially save a lot more over the loan term. You just have to keep the loan long enough for it to make sense.

There’s also paying extra on your mortgage, which depending on how much more you pay each month, could lower your effective mortgage rate to something closer to 4-5%, or even 3%.

The more you pay toward principal, the less interest you pay, which makes your mortgage operate more like a low-rate home loan.

We’ve also seen a resurgence in assumable mortgages, which allow a home buyer to take on the seller’s loan as well.

Many millions of existing homeowners have mortgage rates in the 2-3% range, so it might be possible to buy their house AND snag their low-rate mortgage.

One new service trying to make this process easier is called Roam. And there are others like it out there too.

Finally, if you’re buying a new home, look out for special rate buydowns from the home builder’s lender that offer a below-market rate.

Or if you’re buying a used home, ask for seller concessions, which can be used to buy down the interest rate.

And remember, you’re not necessarily stuck with your rate forever. If rates go down, look into a rate and term refinance to take advantage.

Source: thetruthaboutmortgage.com

Apache is functioning normally

They say to never say never. But why?

Because if you say it, whatever you said would never happen typically happens. Go figure.

Well, speaking of, Fannie Mae chief economist Doug Duncan recently said barring a “catastrophic economic event,” not to expect mortgage rates to return to 3% in our lifetimes.

I wrote about it on Twitter and it garnered a big reaction, with most saying he’s right. And others asking how old he was…

My take was that when I hear things like “not in our lifetime,” I naturally expect them to occur sooner rather than later.

How Did We Get 3% Mortgage Rates to Begin With?

Before we talk about the possibility of mortgage rates being 3% again, let’s discuss how they got there in the first place.

After the early 2000s mortgage crisis led to the Great Recession between 2007 and 2009, the Fed took action to lower its own lending rate (the federal funds rate) to nearly zero.

This was done to increase economic output by encouraging banks to lend money and for consumers and businesses to take out loans.

Despite the Fed’s best efforts, the economy continued to contract, leading to the advent of an unconventional monetary policy called Quantitative Easing, or QE.

Without getting too wordy here, the Fed began buying long-dated treasuries and mortgage-backed securities (MBS) to stimulate lending and turn the economy around.

Thanks to a very large, new buyer in the market, bond prices went up and their yields (aka interest rates) plummeted, as did consumer mortgage rates.

By the end of 2011, the 30-year fixed fell just below 4%, per Freddie Mac, as seen in the FRED chart above. And in 2012, it was in the low-3% range.

The Fed’s QE program was launched in 2008 and ran all the way until 2020, thanks to COVID-19 requiring an additional round.

Effectively, it was the perfect storm of a zero-interest rate policy (ZIRP) coupled with enormous buying of agency mortgage-backed securities. They currently hold over $2.5 trillion in MBS!

This led to the lowest priced 30-year fixed mortgage on record, and many lucky American homeowners got their hands on one.

Could the Same Thing Happen Again?

Anything is possible, which is why I say never say never. But as Duncan noted, it might take a bit of a catastrophe. Or possibly a major geopolitical event. Or both.

Some wrongly claimed we needed a pandemic to see 3% mortgage rates, but if you study the mortgage rate timeline, that’s simply not true.

As noted, the 30-year fixed was sub-4% all the way back in 2011, nearly a decade before COVID-19 reared its ugly head.

Yes, the pandemic led to even lower mortgage rates, with the 30-year fixed falling to a record low 2.65% during the week ending January 7th, 2021, per Freddie Mac.

But all it took was a Global Financial Crisis (GFC) to get us to 3% mortgage rates. Easy-peasy (kidding).

This isn’t to say it’s right around the corner, but it’s clearly possible. Of course, these might be generational events.

So lifetime might be the wrong word choice here, but generation could be right. As in, not in this generation. But perhaps the next one.

If a generation is around ~30 years, this means many people could see this same thing play out again, though maybe not very soon.

However, things tend to move a lot quicker these days and some argue that we live in a low interest rate world now where a return to double-digit interest rates is unimaginable.

And even long-term average rates could be unthinkable to some given how high home prices are these days.

If you consider the average 30-year fixed mortgage rate over the past 50 years, it’s around current levels of just over 7%.

If we throw out the extreme 1980s mortgage rates, the long-run average is closer to 5.5%. But that includes the crazy low-rate years over the past decade…

How About 4% Mortgage Rates?

While I do agree with Duncan’s general sentiment that a return to a 3% 30-year fixed is unlikely, at least anytime soon, we could get somewhat close.

It wouldn’t shock me to see a 30-year fixed start with a ‘4.’ As in 4.99%, or something to that effect.

Heck, the home builders are still offering special mortgage rate buydowns that low at this very moment.

And if you’re willing to pay discount points at closing, if/when rates moderate as inflation falls, a 4.99% rate could be within reach.

Even without points, rates could get close to those levels if the economy cools rapidly and the Fed begins cutting its own rate again.

Remember, bad economic news is a friend to mortgage rates, so if unemployment spikes, and production/spending declines, rates could come down pretty quick.

At this juncture, many expect the Fed to begin cutting rates as their inflation fight wanes, which if the 10-year bond yield cooperates, could lead to a 30-year fixed closer to 6% by 2025.

And maybe even lower if mortgage rate spreads normalize. This alone could get some borrowers back into the high-5% range without paying a ton at closing.

Of course, that’s all speculation and nobody really knows for certain which way mortgage rates might go.

What Are Your Options If 3% Mortgage Rates Don’t Return?

Even if the 3% mortgage doesn’t return, there are various options to lessen your mortgage interest expense.

For one, there’s always buying down your rate, which involves paying discount points upfront for a lower rate the entire loan term.

This is a form of prepaid interest where you pay more today, but potentially save a lot more over the loan term. You just have to keep the loan long enough for it to make sense.

There’s also paying extra on your mortgage, which depending on how much more you pay each month, could lower your effective mortgage rate to something closer to 4-5%, or even 3%.

The more you pay toward principal, the less interest you pay, which makes your mortgage operate more like a low-rate home loan.

We’ve also seen a resurgence in assumable mortgages, which allow a home buyer to take on the seller’s loan as well.

Many millions of existing homeowners have mortgage rates in the 2-3% range, so it might be possible to buy their house AND snag their low-rate mortgage.

One new service trying to make this process easier is called Roam. And there are others like it out there too.

Finally, if you’re buying a new home, look out for special rate buydowns from the home builder’s lender that offer a below-market rate.

Or if you’re buying a used home, ask for seller concessions, which can be used to buy down the interest rate.

And remember, you’re not necessarily stuck with your rate forever. If rates go down, look into a rate and term refinance to take advantage.

Source: thetruthaboutmortgage.com