Tag Archives: Interest Rates

An Update From A Trusted Local Lender

I just received this great bit of information from one of my trusted local lenders, Darlena Marmins, regarding interest rates.  It is great information to be aware of and remember that interest rates are key to your overall purchasing power.

“Financial Volatility After the Election” 

It appears that everyone, including the financial markets are glad that the election is over.  The volatility that we have been seeing was not limited to the equity markets, as long-term interest rates also spiked sharply.  The mortgage backed securities suffered a 300 basis point decline in just three trading days.  This recent damage will not likely be able to be recovered in the near term.  To put this in perspective a 30 yr fixed rate increased from 3.625% to 4.0% in those same three days.

The question is–where do the markets go from here? The calendar does not change. We still have another employment report to be released in early December and a meeting of the Federal Reserve Board’s Open Market Committee afterwards. It is expected by the markets that the Fed will raise its benchmark interest rate by 0.25% in December. Any larger move would be a surprise, which could rile the markets. But a 0.25% increase should be expected and probably will not provide much mayhem in this regard. This is especially true if the recent rise in long-term rates holds. In this case, we would definitely think that the market would have priced an increase by the Fed into the markets. 

Our customers have all been used to seeing rates below 4.0% for most of this year, but it appears that those days are gone for now.

Please feel free to contact me with any additional questions.
Thank you
Darlena Marmins
Mortgage Banker
Colorado State Bank and Trust

There are a lot of financial steps that go into purchasing a home. Please contact me if  you have any questions or would like a recommendation on a good local lender.

Interest Rates

Did you know Interest Rates Are Low Right Now? 

interest rates

Interest rates have been one of the biggest incentives to purchase a home over the last few years.  With interest rates at historic lows, you are able to borrow more money that you would otherwise.  Your interest makes up a huge portion of your monthly mortgage payment.

For example, if you have a gross monthly income of $4000 with virtually no debt, you could afford a payment of around $1100 per month.  That figure comes from the standard that many banks use that says your monthly housing costs should not exceed 28% of your monthly income.  If your interest rate is 4%, the portion of that $1100 that goes towards your principal is greater.

When the interest rates rise to 5%, that decreases the portion of the payment that actually goes towards your principal.  What that translates to is the at 4%, you might be able to qualify for a mortgage around $195,000 where as at 5%, you might only qualify for $178,000.  The most important thing to remember about interest rates is that they don’t change your monthly payment, but rather how that payment is divided up and ultimately what you are about to qualify for.

-Anne Skinner