James W Reuland Jr

About James W

Todays  Rates:

Rates oftern change multiple times throughout the day so these are only representative of where rates may have been at sometime during the day and should only be used as an indicator of what range may be available.

*assumes a 300K+ loan amount, with escrow account and a 740 min Credit score

Government Reported average rates are available in the table at the bottom of the page....

Another question that I get asked alot is "Why didn't I get the same rate that my neighbor got?"

So, what impact will the Fed’s announcement to lower the benchmark federal funds rate have on mortgage interest rates? 

Certainly, mortgage rates industry-wide are unpredictable right now but hopefully, the information below will be helpful.

The Federal Funds rate, the Prime Rate and Mortgage Rates:  The prime rate (prime) is the interest rate that commercial banks charge their most creditworthy customers, generally large corporations. The prime interest rate, or prime lending rate, is largely determined by the federal funds rate, which is the overnight rate that banks use to lend to one another.

So, when the Fed lowers the federal funds rate it affects the Prime Rate. Therefore things that are directly based on the Prime Rate, like credit card rates, auto loans and home equity lines of credit are impacted.  The short-term Fed Rate and the Prime Rate typically have little to no direct effect on long-term mortgage rates.

Cutting the Fed Rate is a short term stimulus which often encourages investors to flee the safe haven of bonds—or mortgage-backed securities—and invest those dollars into stocks. When this happens, you see a rally in the stock market and a sell-off of mortgage-backed securities, both of which cause interest rates to go up.

When the Fed cuts interest rates, especially by a large or repeated percentage-point drop, people automatically assume that mortgage rates will fall. But if you follow mortgage rates, you will see that most of the time, the rates fall very slowly, if at all, in response to a Fed Rate cut.

The US 10 Year Treasury Rate:  In typical market conditions, the rise and fall of the US 10 Year Treasury Rate will closely align with the rise and fall of fixed mortgage rates. This past week, we have seen sharper than usual changes in the 10 Year T-bill, largely due to the global issues impacting the market.  This is contributing to frequent and sometimes drastic investor rate changes, as this rate is literally changing by the minute. So, while you can usually gauge mortgage rates by following the 10 YR T-bill, sometimes other factors come into play to cause them to diverge.

Investor/Industry Capacity: This is one big reason you are not seeing the rise and fall of the US 10 Year Treasury align as closely with mortgage rates as you would expect in “typical” market conditions. The overall drop in the 10 Year T-bill dropped mortgage rates low enough to sharply increase the number of loans being originated industry wide. The entire industry is now at capacity for processing and closing loans for the next 60-90 days. What happens when Lenders can’t process any more loans in a given day? They raise the rates! Why? Because higher Interest rates are an effective gate keeper and they slow down the refinance applications dramatically. So, higher rates can come from excessive demand regardless of the underlying economic data.

What does it all mean? This means you cannot simply rely on economic conditions and the 10 Year Treasury Rate alone to know what mortgage rates will do. We are in unprecedented times, and we are not seeing rates perform in a way that is predictable, traditional or routine.  In this unpredictable market, if you see a rate that works for you and your current circumstances, consider locking. Rates are LITERALLY here one minute and gone the next. In the last week we have seen Investors shut down their “Lock Desks” multiple times throughout the day to change rates due to the demand, so be prepared to make a quick decision if you want that rate, because it might be gone an hour later.

In closing, please know that I monitor interest rates daily.  We work with approximately twenty investors and each investor updates rates in the morning and again throughout the day depending on market volatility.  Once your rate is locked, each investor has a different rate renegotiation policy if the market improves. Depending on where you are in the process and how much time we have prior to closing, we may be able to renegotiate a better rate.

However, the converse is also true, that we might not be able to change investors given the time constraints and current turn times of processing, underwriting, final approval and closing.  If your rate is locked and I can renegotiate better terms, you will hear from me – I monitor my pipeline daily.  100% of my business is comprised from past clients, past client referrals or referrals from business partners with whom I have had a very long-standing business relationship.  I take your best interest very seriously and will do everything within my power to ensure you receive the best terms possible.

Thank you very much for entrusting me to be your steward in these volatile times. With the extremely high volume of phone calls, it may be easier to reach me by email or text. Please know that I am working on your loans and making sure that we are getting the best deals that we can.  

Sincerely,

Jim Reuland

Click on the Rate Chart to the right to see the latest interest rate averages that you can expect

to see in the market today, these are updated daily and you can expect slightly higher rates on a FREE refi.

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Contact James W

James W Reuland Jr

Owner & Vice President
NMLS# 138304