For anyone who wanted to know what's going on with mortgage rates these days, I'll try to help understand the המ
For anyone who wants to know what's going on with mortgage interest rates these days, I'll try to help understand the situation;
The above refers to residential mortgages and will not apply 1 to 1 to commercial, private or Hard Money held mortgages.
In times of crisis, especially a global crisis, investors tend to sell stock holdings and invest in more conservative channels, such as bonds, including mortgage portfolios (Mortgage Backed Securities - MBS). When mortgages increase in value due to demand, lenders receive a higher return when they sell the mortgage portfolios on the secondary market, and can therefore charge a lower interest rate.
Up to a certain level…
We are now in a state that has never been, with much uncertainty about the near future, or how long the situation will last.
Uncertainty is so great that we see a situation where both the stock market and the bond market are falling at the same time, and interest rates are rising. In red to the level of August 2019.
In addition, because interest rates have for a short time been lower than they have been in months, perhaps even years, all banks are facing huge numbers of borrowers who have applied in recent weeks for repayment requests, in an attempt to improve their situation. To withstand the pressure and lower the number of new applications, most of them "pad" interest rates by 3 to five points (which translates into higher interest rates).
When the pressure goes down, the banks will remove the "upholstery", but it will most likely only happen after the basic interest rate rises to a higher level.
The sequel is unclear. If people continue to work from home, some businesses will collapse. Others will lay off dozens of workers, and the chances of some of the mortgages defaulting will increase, making the CBS less attractive, and raising interest rates. There are few scenarios where mortgage interest rates have dropped significantly again (as opposed to short-term interest rates from the Federal Reserve, which do not directly affect mortgages).
There is no doubt that the demand for homes in the short term has decreased, so if you have high confidence in employment and income - this is a great time to seize a home at a discounted price with interest that is historically still considered very low!
Also, if there is indeed an increase in the number of people who lose their homes, most will not become homeless but renters, which will increase demand and increase in rent.
I also recommend checking out an option to buy a lower interest rate with points - even if you do not have excess money there are ways to make it pay off in the long run -
It is important to work with a mortgage agent who really understands the market, and the tools at his disposal.
By the way, in the attached graph, 3% is the Disbursed Rate of the CBS, with investors earning the difference between this number and the actual interest + points.
I would be happy to help and answer any further questions.
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