Where Are Rates Going?

Where Are Rates Going?Where Are Rates Going?

I recently was given a statistic that there are over $3 Trillion in adjustable rate loans that are set to reset in the next 2 years. That is A LOT of mortgages. These mortgages are the “option” arms (potential negative amortizing) - the 3, 5, and 7 year-fixed that are now reaching the ends of their fixed periods as well as “interest only for the first 5 years” 30 year fixed mortgages.

What does all this mean to you if you have one of these loans? Some of them are going to reset at a much higher interest rate and a shorter term. That means that you won’t have a 30 year mortgage to pay off, but maybe a 23 year mortgage in some cases. This combination of a higher interest rate and shorter term is going to prove financially catastrophic to some people, and they may be forced to refinance back into the same type of loan they wanted to get rid of. What does the $3 Trillion have to do with it, other than being a VERY large number and a whole lot of people in the same boat? It means that with all of that demand for money coming down the pike to the lenders and Wall Street, the supply of money isn’t going to be endless. It will be the old rule of supply and demand: when demand outstrips supply, prices or rates, will go up.

If you have any questions about your mortgage, give me a call. I am always happy to help you review it and give you your options.

Also, conforming loan limits are due to change in early December. I will post them on our web site www.mountaincoast.com once this happens.

Fixed Rates for Conforming Mortgages (under $417,000) as of 10/23/06 (p.m.) are:
30 year fixed: 6.25% (APR 6.32%) payments are $2,567.54/mo.
15 year fixed: 6.00% (APR 6.12%) payments are $3,518.88/mo.

I recently was given a statistic that there are over $3 Trillion in adjustable rate loans that are set to reset in the next 2 years. That is A LOT of mortgages. These mortgages are the “option” arms (potential negative amortizing) - the 3, 5, and 7 year-fixed that are now reaching the ends of their fixed periods as well as “interest only for the first 5 years” 30 year fixed mortgages.

What does all this mean to you if you have one of these loans? Some of them are going to reset at a much higher interest rate and a shorter term. That means that you won’t have a 30 year mortgage to pay off, but maybe a 23 year mortgage in some cases. This combination of a higher interest rate and shorter term is going to prove financially catastrophic to some people, and they may be forced to refinance back into the same type of loan they wanted to get rid of. What does the $3 Trillion have to do with it, other than being a VERY large number and a whole lot of people in the same boat? It means that with all of that demand for money coming down the pike to the lenders and Wall Street, the supply of money isn’t going to be endless. It will be the old rule of supply and demand: when demand outstrips supply, prices or rates, will go up.

If you have any questions about your mortgage, give me a call. I am always happy to help you review it and give you your options.

Also, conforming loan limits are due to change in early December. I will post them on our web site www.mountaincoast.com once this happens.

Fixed Rates for Conforming Mortgages (under $417,000) as of 10/23/06 (p.m.) are:
30 year fixed: 6.25% (APR 6.32%) payments are $2,567.54/mo.
15 year fixed: 6.00% (APR 6.12%) payments are $3,518.88/mo.