Interest Rate Increase

Interest Rate Increase
Interest Rate Increase

Hi, this is Tom Heath with the Mortgage Guidance Group at Nova Home Loans. And this is our weekly update on mortgage and real estate related matters. Today, I want to talk about interest rates. As we started the year in 2022, we’ve seen interest rates move up quite quickly. We have predicted rates would be moving up, I’m not sure that we thought they’d be moving up this fast, but there are a few reasons for this. I just want to kind of fill you in on those.

First it’s just market forces. There’s concerns about inflation and if you are buying a bond with a long-term fixed-rate, inflation will start to eat away at those profits over time. So you demand a higher interest rate. You want a higher interest rate when you buy that particular instrument. But the Federal Reserve has been helping keep mortgage rates low for the last several years by buying mortgage-backed securities. And they’ve announced that they’re going to stop doing that over the course of this year. They haven’t given us a specifics, but they’ve indicated that that’s the case.

That is creating a lower demand for mortgage-backed securities, and when demand is lower, then interest rates will rise. We’ve seen this take place already throughout the year. Very important right now that your clients are staying in contact with their mortgage professionals and looking at ways to mitigate some of these losses. There might be some positive trends coming down the line, very typical to see a rebound after a prolonged period of movement in one direction and that would be the time to probably lock in.

I think at this moment, the best advice that I can give is not to hold out for that perfect best interest rate. If something makes sense when it comes to the monthly payment and the cost of the loan, I would lock that in personally, because right now, waiting for that best rate give me that you lose out on a really good opportunity. Even though rates are moving up there, still quite low compared to where they’ve been historically.

If you have any questions on this, don’t hesitate to reach out. You can find more information and interest rates and trends on our website, mg group, Tucson. And as always, you can email us call us, and we’d be glad to answer. Thanks so much. Have a great week.

Tom Heath
VP / Senior Loan Officer
Mortgage Guidance Group of NOVA® Home Loans
6893 N Oracle Rd #121
Tucson AZ 85704