A running commentary on the Wenatchee real estate market in and around North Central Washington 98801. Hints and tips on buying Wenatchee homes, selling homes and finding the home you want. Real estate sales in Wenatchee to Leavenworth. Home buying? Home selling? Looking for Wenatchee Real Estate? Stop by here.

Friday, January 14, 2005

interest rates

30yr, fixed rates as published dropped today. Rates are under 6% and will likely remain in about a 1/2 % range over the next month or two. APR are higher and will depend on many factors. We have several good, reliable funding sources. It pays to shop around a little.


Anonymous Anonymous said...

If the Fed raises rates how long can the mortgage rates stay low...won't they go up too?

9:48 PM

Blogger Darel Ansley said...

Regarding the question about the Fed rates versus mortgage rates, here is a brief explanation: In general, if Wall Street and the Fed are in agreement on the state of the economy, the Prime rate and mortgage rates should sort of track together.

Mortgage rates are set by the supply and demand of Mortgage Backed Securities (MBS) which are essentially fixed payment bonds made up of a pool of home mortgages.
Historically, when investors don't think they will be getting high returns on their stocks, they put more money into something guaranteed like government bonds or MBS.

The Fed supposedly is raising the Federal Funds rate (which drives the Prime)because they fear the economy is running away with growth. If Wall Street investors agreed that stocks were going to be growing rapidly, they would pull their money out of bonds and MBS, and mortgage rates would be rising.

So, here is my analysis for what it's worth. If the Federal Reserve Board members are really the smart guys, then the growth they are controlling is out there on the horizon somewhere. When the growth in stocks does finally arrive, we will see mortgage rates going up. Historically, even if our mortgage rates go up another 1%, we are still at historic lows.

10:14 AM

Blogger Perrin said...

I think you are pretty much right on. I look at rates as having several components. The first is expectation of inflation. If the outlook for 30 yrs is higher (or even 7 years) inflation then rates will go up. The Fed by raising short term rates is attempting to damper the long range forecast. However, if the curve between long term and short term gets inverted (it has a few times) then regfardless of outlook mtge rates will rise.

The second is opportunity. Again if short or intermediate rates rise enough to make the risk of long term unattractive then again rates go up.

Finally there is the stock market as was pointed out. Where can you get the best return? Money will go to quality.With some tradeoff for yield. Therefore is quality stocks go up...especially if their dividends go up then rates will have to adjust.

My personal thoughts are mtge rates between 5.75 and 7.25 over 18 mos. Which is really pretty good.

4:23 PM

Blogger Mortgage Center said...

Hey, you have a great blog here! I'm definitely going to bookmark you!

I have a mortgage calc site/blog. It pretty much covers mortgage calc related stuff.

Come and check it out if you get time :-)

8:50 AM


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