This week, the June Federal Open Market Committee (FOMC) decided to tap the brakes on hiking interest rates, as they had previously indicated. However, the Chairman did state that at least two more rate hikes are likely to come.
It is a common misconception among the public that the Fed's interest rate decisions directly affect mortgage rates. While these decisions do influence market dynamics and investor behavior, they do not directly change mortgage rates.
Investors and traders are guided by overall economic information, directing their activity towards equities, commodities, currency, or bonds. Positive bond activity typically leads to improved interest rates, especially in the mortgage-backed security (MBS) sector.
This week's inflation readings have shown slight improvements in mortgage-backed securities, but they are still trading within a range that keeps our interest rates relatively stable on a day-to-day basis, albeit with some cost differences.
Given our current economic conditions, it is my belief that we will continue to see interest rates increase in the foreseeable future. Many people call me after hearing news reports that rates may be better or have gone down. However, they fail to look at the data and charts to understand the timing of those improvements.
The media often sensationalizes stories, and while it may be somewhat accurate, its practical application can be misleading. Relying on unrelated sources for information can drive you crazy as you search for significant differences that may not actually benefit your financing goals.
The best advice one can follow is to align yourself with a trusted advisor who can provide accurate answers and understands the factors that drive the market. This advisor should be able to explain market trends in a way that makes sense to you. Listening to media hype or information that may seem accurate but lacks practical application is just another way of subjecting yourself to unnecessary frustration.
In the financial world, it's easy to become prey to transaction-driven individuals who prioritize closing deals or generating business. Spending significant time shopping around for the lowest price can put you at risk. Instead, invest your time in developing relationships with professionals who have the best intentions, robust systems, and align with your overall objectives.
Having a trusted advisor often means securing your position in a rising-rate market much earlier, avoiding the pitfall of continuously making calls during your escrow period. Allowing rates to creep up while you wait can lead to a point where you're unable to secure the rate you could have obtained if you had listened to your trusted advisor from the beginning.
Many losses occur because we believe there is always something better out there, instead of taking advantage of the opportunities right in front of us. Remember, relationships are the greatest asset in business, and wealth is created when like-minded individuals work together toward a common outcome.
About the Author:
Aaron Chapman is a veteran in the finance industry with expertise in complex transactions since 1997. He is ranked in the top 1% of over 300,000 licensed loan originators and closes over 100 transactions per month. Learn more at aaronbchapman.com.
Disclaimer:
The views and opinions expressed in this blog post are provided for informational purposes only and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.
SecurityNational Mortgage Company, and its loan officers, unless individually licensed and specifically denoted in their credentials, are not qualified to, and are prohibited from representing themselves as accountants, attorneys, certified financial planners, estate planners, investment specialists, or tax experts, and will not advise you in those matters. Always seek the advice of a licensed professional. This article is for informational purposes only, contains the opinion of the author, not necessarily the opinion of SecurityNational Mortgage Company, and should not be construed as lending advice. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet LTV requirements and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines, and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over life of loan. Reduction in payments may reflect longer loan term. Terms of the loan may be subject to payment of points and fees by the applicant. Aaron Chapman, NMLS#267844, SecurityNational Mortgage Company Inc., Co. NMLS# 3116, AZ Banker# 0904315, Equal Housing Lender. Any amounts, figures, payments, or loan terms stated are based on continually changing markets, rates, loan programs, and borrower-specific qualifications, and subject to change without notice. See loan officers featured for a personal consultation and accurate pricing.