Are Mortgage Rates Increasing?

Is it weird that I get more style inspiration from the JCrew kids catalog than the grownup one? I just can’t bring myself to wear sequenced tanks with café capris. And, anyway, they put the kids in the cutest clothes, I tell you, even though they do tend to layer them up resembling the kid from The Christmas Story.

Enough of that. Mortgage news.

I just noticed the following LinkedIn post from my Boss Chad Helmcamp:

Unfortunately the market has turned and mortgage rates are moving higher.  They are still great though, so if you are in the market to buy or refinance, give me a call at 713-826-8136.

This sent me into a panic, so I immediately got Chad on the horn for more scoop. He explained all the ins and outs of the mortgage industry and why rates fluctuate. I understood about 17% of what he said, so I’ll translate that bit for you all.

So how much higher?

Mortgage interest rates are anywhere from a quarter to a half percent higher, based on folks’ specific circumstances. Or as Chad put it, 25 to 60 basis points. No clue what that means and neither should you, my dears.

How come they’re higher?

Chad says it’s essentially because rates have been so good for so long that mortgage bonds and treasuries (no clue what those are) aren’t paying anything, so folks are taking their money out of those and putting it in the stock market.

Chad gave me the example of investing my own money. If I began investing in a savings account and saw that I was only making around .01% interest in it, I’d stop investing there. So I’m thinking the folks who invest in our loans (no, I don’t know how they do that – Chad said they “buy the securities of our mortgages” or something) aren’t making any money off our loans lately since we’re getting those loans for so stinking cheap.

That said, those folks, whoever they are, said, “Welllah, [insert scratch of the head here] let’s try the stock market instead of these stinky ole treasuries,” and thus sold their bonds and bought some stocks.

You’re a numbers person, are you?

Now get this. Chad checked the S&P 500 for the last month. No, I don’t know what the S&P 500 is. But either way, it told him that July 24^th was our best day for mortgage rates. And since then, the stock market has been rallying (which I think, based on the context, means the stock market is doing well). So remember how Chad said folks were moving into the stock market? There’s the proof.

So what should you do?

Buy a flipping house! Chad didn’t say that; I did. All we know is, while rates are still awesome, they are trending upward. To put it in a bit of perspective, rates are still lower than when I refinanced back in the spring, so I’m not talking crazy shoots upward, but upward nonetheless. And when you’re talking about financing hundreds of thousands of dollars, a quarter of a percentage point can equate to $30 per month, or to put it another way, over $10,000 over the course of a 30 year loan.

If you’d like to know what payment you’d be looking at for a home of your own, or if you’re interested in refinancing the home you already own, e-mail James (Chad’s actually leaving for Paris on Friday with his lovely wife Rachelle) at JBeaver@EnvoyMortgage.com.

Now, off to see if JCrew sells any of their kids pants in sizes larger than 6X.