Refinance With Lower Mortgage Rates And Net Tangible Benefits

This BLOG On Refinance With Lower Mortgage Rates Was UPDATED On October 30th, 2017

Right Now May Be Opportunity For Homeowners To Refinance With Lower Mortgage Rates

Mortgage rates has been steadily decreasing for the past several weeks and seems like it will continue to creep lower due to the sudden hike after the election of President Donald Trump.

  • Mortgage rates going below the 4.0% mortgage rate mark seems like a reality again after mortgage rates have surpassed the 5.0% mark several weeks ago for conventional mortgage loans. 
  • Mortgage Backed Securities, also known as MBS, has spiked up 95 basis points last week which has dropped mortgage rates. 
  • Mortgage Backed Securities has an inverse affect on mortgage rates. 
  • If Mortgage Backed Securities go up in value, mortgage rates drop. 
  • If Mortgage Backed Securities decreases in value, mortgage rates increases.

Refinance With Lower Mortgage Rates: Why Did Mortgage Rates Drop?

News that weaker than analyst expected employment data is the primary reason for the spike in pricing of Mortgage Backed Securities.

  • Economists has forecasted 180,000 new jobs will be added to our economy, however, only 148,000 jobs were added in the month of September.  
  • Unemployment rate in the United States has dropped slightly from 7.3% to 7.2%. 
  • This drop in unemployment rate has been the lowest since November 2008. 
  • Democrats are crediting this drop to President Barack Obama, however, critics do not consider this good news. 
  • Critics and Republicans feel the drop in unemployment rates was due to people who have left or given up the labor force and gave up in looking for full time jobs. 
  • If you look around, you will see that there is a lot of credit to this reasoning. 
  • I know dozens of friends or people that I know who are underemployed or have given up looking for full time work. 
  • Others are just doing side jobs to get by.

Weaker Employment Data Reports

The weaker employment data reports that was released has convinced investors that the Federal Reserve Board will not slow their bond purchase program until next year.

  • The past five years, the Federal Reserve Board have been aggressively purchasing Mortgage Backed Securities and that is the reason why mortgage rates have been trading at historical lows. 
  • Strong economic and employment data will definitely fuel the Federal Reserve Board to slow their bond buying program which will mean higher mortgage rates. 
  • Any positive signal of good news will definitely trigger the slow down of Mortgage Backed Securities which will spike mortgage rates overnight. 
  • We do not expect any unexpected great economic news coming out in the next several weeks, therefore, we expect mortgage rates to be stable. 
  • However, be prepared for mortgage rates to increase in the future.

Mortgage Rates From Big Banks

Mortgage rates from larger retail banks were quoting at 4.375%.  My mortgage rates are normally 0.25% lower than bank rates and the best rates that I had available were at 3.875% on a 30 year fixed rate mortgage for prime borrowers.

Refinancing Your Current Home Loan

Right now will be a great time to consider refinancing your current mortgage loan or convert you FHA insured mortgage loan to a 95% Loan to Value conventional loan with no mortgage insurance to eliminate the FHA monthly mortgage insurance premium.  Please contact me at 262-716-8151 or at www.gustancho.com for a free mortgage rate and savings analysis.

Gustan Cho NMLS ID # 873293

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