Interest Rates – WeVett

What is the Latest with Credit Ratings?

matt — Thu, 26 Jun 2025 17:12:27 +0000

Moody’s Finally Downgrades the U.S. Credit Rating

Recently, Moody’s was the last of the major credit rating agencies, and there are three of them, to downgrade the United States’ credit rating.

Now, we’re going to talk about:

What does that actually mean?
How can that really impact your mortgage rates?

What Does It Actually Mean?

When you downgrade a credit rating, think of it kind of like, in the personal world, your credit score or credit rating.

Effectively, the last major credit rating agency finally said:

“Hey, the United States… it’s like you went from a mid-800 score to maybe 799. Now you’re in the high 700s.”

So, if you kind of pin the two side-by-side, that’s the idea.

Ratings for sovereign nations go from AAA (a perfect rating) to AA1—which means you’re one step below a perfect credit rating.

Moody’s had held the AAA rating the longest. Back in 1919, we believe, is when they originally gave the U.S. its AAA rating. And now they’ve finally downgraded it—the last holdout of the three major agencies to do so.

The other two had already downgraded the U.S. in the past. It happened back in 2011 or 2009, when we actually saw a downgrade. It later came back up… and then back down again. But for Moody’s, this is the first time they’ve moved the U.S. from AAA to AA1.

How Does This Impact Mortgage Rates?

So how does this actually impact mortgage rates—or just the general creditworthiness of the United States?

By downgrading the credit rating, what that means—putting on my economics hat—is that now the U.S. may have to pay more to borrow.

Think of it again in personal terms: when your credit score goes down, it generally means you pay higher interest rates when borrowing for things like cars, houses, etc.

At a national level, downgrading from AAA to AA1 means that if the U.S. wants to borrow money (usually in the form of Treasury bonds), it might have to offer higher interest rates to attract lenders.

Now, some folks reacted by saying:

“Oh my gosh, it’s going to increase rates dramatically. Treasury yields are going to go way up.”

But remember—Moody’s was the last of the agencies to do this. The other two had already downgraded, so much of that risk was already factored in.

Why Did Moody’s Finally Downgrade?

So why did Moody’s wait so long and finally act?

It was due to recent fiscal uncertainty and concerns over monetary policy in Congress. That gave Moody’s the reason to say:

“Hey, we’re going to cut this back.”

Their wording was effectively that Congress is struggling to maintain a long-term balanced budget, and that’s a risk to the future repayment of U.S. debt. So they decided to lower the rating.

Think of it again like this: someone is rating your personal credit and says:

“Okay, right now you’re making some poor financial decisions, and your future budget planning doesn’t look solid. We’re going to lower your score a bit.”

Which means: you have to pay a little more, because there’s a little more uncertainty about your future.

How Does That Affect You?

Tying this back to what we deal with all the time—mortgages—this generally means we could see higher interest rates on mortgage loans.

In fact, right after the announcement from Moody’s, rates did rise a bit.

Now, it wasn’t as extreme as it would have been if all three agencies downgraded at once, but since the other two had already acted, the market had partially priced this in.

Still, it had an impact.

The Bottom Line

Now you understand a bit more about how credit agency ratings affect the U.S.’s ability to borrow—and how that translates to mortgage rates going up.

Effectively, all the agencies are telling the world:

“We see a bit more uncertainty in the U.S.’s ability to repay its debt.”

So global lenders say:

“Okay, cool. We’ll still lend you money—it’s still a high rating—but we’re going to charge a little more for the risk.”

From AAA to AA1 is still a very strong rating. But it’s kind of like going from an 800 credit score to 790 or 799. Still very good—just not quite as excellent.

My name’s Evan Kaufman.
Hope this helped explain things.
Take care.

Why did Interest Rates Spike?

matt — Tue, 06 May 2025 14:48:35 +0000

What happened to interest rates in the past couple of weeks?

They’ve gone sky-high.

My name’s Evan Kaufman, your VA originator, here to help explain some of this.

A couple of weeks ago, we saw interest rates on mortgages spike. In fact, if you look at the 10-year Treasury yield—a major indicator for the direction that interest rates head—it spiked with the fastest and most furious increase in a 37-year period. Pretty incredible.

At first, I thought, “Wow, that was a long time ago.”
And then I realized—oh my gosh—that was almost during my lifetime too! Some of you watching were alive back then, but still… it’s been a long time.

So in 37 years, we had not seen such a fast spike and increase in rates as we did just a couple of weeks ago.

What Happened?

I’m going to walk through a little bit of the economic background as to how this can occur.

Over the last couple of months, we saw rates at a high. Early in the year—January—we saw rates peaking, hitting a level similar to a couple of years ago when everything was spiking and just going nuts. But then they drifted down slowly.

And then, after the election, everyone was like, “Okay, hey, we might see things get better.”

The Role of Tariffs

Oh—tariffs. I actually have a good video on what tariffs are and how they can impact rates.

Historically, increased tariffs would bring rates down, because ultimately, increased tariffs would increase people’s demand for Treasury bonds and yields. That demand for bonds typically drives mortgage rates down as well.

But the whole theory—that increased tariffs would drive people to a safer investment like the 10-year Treasury yield from the U.S. government—is predicated on people believing that the 10-year Treasury is the standard safe asset.

The issue over the past couple of weeks is that the tariffs have been inconsistent—turned on, turned off, kept on but with exceptions given to certain countries or groups. That inconsistency has shaken investors’ trust in what they should consider a “safe” investment.

Investor Uncertainty

All of a sudden, people are questioning: “Hey, is the 10-year Treasury yield actually safe or not?”

And here’s the problem for us in the mortgage world:
Whether or not you believe it’s safe, the 10-year Treasury yield heavily drives mortgage interest rates.

Right now, we’re in a world where the Treasury yield might appear to be similar to where it was about a month ago—not at the high, not at the low, somewhere in between—but mortgage rates are higher than they were. Why?

Because there’s uncertainty in the market.

Where Could Rates Go?

Could we see mortgage rates calm down over the coming months? Possibly.

The scenario where I see that happening is if we slow down the tariff changes, stop adding or removing tariffs, and just let the market settle. If things steady and folks get more comfortable with where things are at, we could see rates naturally settle down a bit.

Right now, even though Treasury yields are similar to a month ago, mortgage rates are higher because people are uncertain. Investors are demanding a higher return for their capital, which pushes mortgage interest rates up.

Alternatively, we could see a world where investors continue questioning the 10-year Treasury as a safe investment. If that happens, we could see higher rates for longer—a phrase that’s been thrown around a lot lately.

Why It Matters

If investors change their mindset and no longer see the 10-year Treasury as the standard safe investment—as it’s been for decades—then we’re in a whole new world of volatility.

That’s why we’ve seen such radical changes in rates.

So if you’ve been home shopping recently, you may have gone from:
“Okay, not a bad rate,”
to “Hey, that’s actually a pretty good rate,”
to “Oh my gosh, what just happened to my interest rate?”

That’s because everything right now is getting whacked around by the tariff situation and other macroeconomic factors.

Final Thoughts

Keep an eye out over the coming weeks—not just for what happens with tariffs, but with general economic news.

Typically, bad economic news might bring mortgage rates down over time. But that’s not guaranteed if inflation remains high. In that case, the Federal Reserve steps in, trying to fight inflation, which can also keep rates elevated.

Boy, that was a lot of economic background to digest!
I studied this stuff—it was my degree. I love economics in a weird way. So thank you for bearing with me through all of that.

But seriously, I just wanted to comment on the wild roller coaster ride we’ve had with interest rates the past couple of weeks. Hopefully, that helped demystify what’s going on.

Just know: there are some of us out here who absolutely love understanding how this works and are happy to help explain and talk it through.

Feel free to reach out to me.

My name is Evan Kaufman.
Thanks again for listening.
Take care.

Are We In a Real Estate Boom or Bust?

matt — Fri, 18 Apr 2025 17:25:37 +0000

Are We in a Housing Boom or a Housing Bust?

My name is Evan Kaufman, your VA originator—here to help talk through some of what we’re seeing in the housing market today. Bust or boom—what are we really seeing in housing?

“Location, Location, Location” Still Rings True

You’ve probably heard the old saying “location, location, location” so much in real estate that it makes your eyes roll. But the truth is, it still matters—a lot.

In today’s environment, we’re seeing wide variation across the U.S. in home appreciation—or in some cases, depreciation. But when you zoom in, the differences often come down to location.

Micro-Market Examples: California & DC

Let’s start with some examples to show how this works:

California

In California, especially in fire-prone areas like L.A., we’ve seen extreme cases—sometimes within the same city or even the same block:

In some neighborhoods affected by fires, home values have dropped by up to 50% in just a few months.
Meanwhile, just blocks away, prices have skyrocketed due to high demand and lower inventory.

It’s a perfect example of how localized and unpredictable the market can be. Rent has jumped in some areas, while sales prices have tanked in others—purely based on location.

Washington, D.C.

Now flip to the other side of the country—Washington, D.C.. Due to recent political changes (as of late February), listings have spiked dramatically, up nearly 50%.

Why? Many government employees are:

Being laid off,
Preparing for layoffs,
Or just concerned about the uncertain political climate.

So we’re seeing a sudden wave of listings. And that’s impacting prices—but again, only in that local market.

Our Unique Perspective on Military Markets

We work with clients all over the country—especially around military installations—and are licensed in over 30 states. So we get to see what’s happening nationwide, from Virginia and Maryland to California and beyond.

For example, a huge portion of our business runs through the D.C. metro area, since it’s a hub for mid-career military professionals. So we’re seeing first-hand what’s happening with those listings, layoffs, and shifting prices.

But again—these are micro-markets. They don’t represent the full national picture.

The Bigger Picture: A Return to Movement

Now let’s zoom out.

What we’re seeing across many states is what I’d call “pent-up demand.”

Interest rates have been elevated for nearly three years. Back in 2020–2021, people were locking in rates in the 2% and 3% range—some even buying them down into the 1s.

But in early 2022, that changed. Rates started climbing. By 2023 and 2024, they were consistently in the 6–7% range.

Now, in 2025, we’re entering the third year of elevated rates—and people are finally getting used to it.

The Reality of Long-Term Turnover

The average American moves every 7 to 10 years, and we’re now three years into this “new normal.” For many families, it’s simply time to move again.

We’re seeing:

More buyers reenter the market
More agents reporting increased activity
A slow but steady build-up of momentum

Even in our own business, we’re feeling it. And talking to real estate agents across the country? They’re saying the same thing.

The Wildcard: Economic Surprises

Now, could something major change that? Of course. Unpredictable events happen—just like in 2008–2009. But barring some huge economic disruption, people are moving again.

In fact, I feel it personally. My wife and I are getting that itch to move too.

VA Loans and Future Refinance Options

One big advantage for VA loan holders: the Interest Rate Reduction Refinance Loan (IRRRL), also called a VA streamline refinance.

If rates drop again in the future, VA borrowers have one of the easiest paths to refinance—far easier than most loan types.

And that gives people confidence. They understand that if they buy now, they’ll still have options later.

Final Thoughts

So are we in a housing boom or a bust?

It depends where you look.

Some areas (like D.C. and parts of L.A.) are facing unique market stress.
Other areas are heating up with renewed buyer activity.

As a whole, we’re seeing pent-up demand start to release. People are more accepting of today’s mortgage rates. And we believe that’s going to lead to more market movement in 2025.

But always remember: location, location, location still matters. Every market behaves differently.

If you want to talk more about what’s happening in your area—or if you’re looking to buy—I’d be more than happy to help.

Again, my name is Evan Kaufman, VA loan originator. Hope you have a wonderful day.

Take care.

How to Predict Mortgage Rate Changes

matt — Fri, 08 Nov 2024 23:10:33 +0000

Transcript

What is one indicator that can help show me which way mortgage rates are going? Today, we’re going to talk about an indicator out there that, if you watch it, will give you a pretty good idea of the direction in which mortgage interest rates could be headed in the near future.

Now, how could this help you?

If you happen to be looking for homes and you’re thinking, “Alright, I hear rates are going all over the place—they’re up, they’re down. How can I get a feel for today if I’m going to call my loan officer and ask about where rates are?”

If you want to get a sense of the direction that rates have been going, you can watch this one indicator and get a good idea.

This way, if you get quoted a rate—let’s say I gave you a rate one day—remember that rates move all the time. So, if we didn’t lock it in, the rate is going to keep moving.

But if you got quoted one day, and then the next day you found a home you love and looked at this indicator and saw that it went down, there’s a decent chance the rate should be about the same, if not better.

If that indicator went up, there’s a good chance your mortgage rate might be a little bit higher if you didn’t lock it in.

So, why is this indicator important?

It’s really important because it’s what a lot of industry experts and investors who buy mortgages watch as well.

If you know this one, you can get a good feel for where mortgage rates are headed, whether you’re looking to buy a home or trying to lock in a rate for refinancing. It gives you a good idea.

That indicator is the 10-year Treasury yield.

The 10-year Treasury yield is closely tied to where mortgage rates go. Some people assume the Federal Reserve rate is directly related; they think, “Oh, the Federal Reserve rate went up, so mortgage rates must go up,” or “It went down, so mortgage rates must go down.”

But that’s not the case.

The Federal Reserve rate affects mortgage rates indirectly, usually in advance, based on what the Fed says, not necessarily where it sets the rate.

The 10-year Treasury yield, though, typically has a direct impact on mortgage rates.

Historically, while not always perfect, it’s been a good indicator for a long time.

Some people like to say it “dances closely” with mortgage rates.

Is it perfect?

No.

But most of the time, if that 10-year Treasury yield goes up, you might see mortgage rates go up a bit. If it goes down, you might see mortgage rates drop a bit.

If you’re trying to find where the 10-year Treasury yield is, you can easily check it.

On an Apple phone or Android, go to your stock app and look up the ticker “TNX.”

“TNX” is the 10-year Treasury yield—a basic index showing the general direction.

You’ll notice that the numbers may be lower, like around four. This doesn’t mean mortgage rates will be at 4%, because the 10-year Treasury yield reflects the “risk-free rate,” essentially the government’s lending rate for 10 years.

Mortgages, while generally safe, aren’t as risk-free, so mortgage rates are typically a bit higher than the Treasury yield.

However, the direction the 10-year Treasury yield moves is often the direction mortgage rates will move as well.

The reason is complex, but simply put, the 10-year Treasury yield is what many investors and groups use as a way to hedge against mortgage rates.

So, if they want to hedge risk, they’ll use the 10-year Treasury yield as a baseline, adding a premium for mortgages.

Ultimately, the 10-year Treasury yield drives mortgage interest rates. So, when you’re buying a home or refinancing, and you’re wondering if now is the right time to buy or lock in a refinance rate, watching the 10-year Treasury yield can give you a good sense of which way your mortgage rates might be headed.

My name is Evan Kaufman, your VA loan originator, here to help you. Take care.

How Does a Down Payment Affect Interest Rate?

matt — Mon, 04 Nov 2024 20:57:52 +0000

Transcript

How does my down payment affect my interest rate? We’re going to go over down payments and if—and how—they can affect your interest rate on your home loan, whether you’re purchasing a home or doing a refinance. We’ll look at how much equity you’re keeping in the home and how it can impact the loan terms you might receive. We’ll be focusing on conventional loans and what we specialize in: VA loans.

So, do down payments impact interest rates in the first place?

Well, it really depends on the loan type and your lender. Let’s start by looking at conventional loans.

With conventional loans, down payments now can affect your mortgage interest rate. This is a significant change that happened last year when new “Loan Level Pricing Adjustments” (LLPAs) were introduced. Now, when we look at rates, the matrix includes down payment as a factor, and there’s a drastic impact on interest rates. We have a few videos on this topic from last year if you’d like more detail, but the basics are that if you put more money down, there’s typically going to be less of a loan-level pricing adjustment—meaning less of a penalty on your interest rate.

There’s a bit of a caveat here: they modified the system so that if you put the lowest amount down, you also face fewer restrictions. The idea is to help incentivize people who have less money to put down, so they don’t get penalized as heavily. Essentially, people who get hurt the most are usually those who fall somewhere in between the high and low down payment amounts. That’s why it’s crucial—if you’re considering a conventional loan—to run different scenarios with your loan officer (ideally one of us) to understand the adjustments. We can look at 5% down versus 15% or 20% down, because these scenarios can really impact the rate on conventional loans.

Now let’s turn to VA loans, which is our primary focus. VA loans make up 70% of our business with active duty military. In the case of VA loans, down payment makes no difference at all. Whether you put 0% down or 50% down, your interest rate remains the same. This is a common question: “If I put more money down, will that impact my interest rate on my VA loan?” With VA loans, the answer is no, unlike conventional loans where down payment does matter.

Why is that? Well, the VA guarantees the loan no matter the down payment. The VA home loan guarantee doesn’t mean the VA funds VA loans—people sometimes assume that. Instead, the VA offers a guarantee to us, the lenders, similar to an insurance policy. Essentially, they say, “If your company funds Johnny’s loan and he defaults, we’ll cover about 25% of the loss.” There are some technical details here, but basically, the VA covers 25% of losses on VA loans in case of major issues, regardless of down payment. This reduces lender risk, keeping the rate stable. So, while a conventional loan depends on your down payment, a VA loan doesn’t reflect any difference in mortgage rates based on your down payment.

This is one of the great advantages of a VA loan, especially if you’re putting little money down. For those who want to put a lot of money down, we sometimes compare a VA loan to a conventional one to see if conventional might offer a slight edge. It usually doesn’t, unless multiple factors are combined, like high credit, high down payment, and avoiding the VA funding fee—conditions that might favor a conventional loan.

In summary, down payments can impact your interest rate if you’re dealing with conventional loans or other types of loans. However, with a VA loan, it doesn’t make a difference to your mortgage interest rate whether you put more or less money down. Although credit score can affect it somewhat, down payment doesn’t play a role.

My name’s Evan Kaufman, your VA originator. I hope this helps explain how down payments can affect your rate. Take care—bye!

Fixed Rate Mortgages vs Adjustable Rate Mortgages

matt — Fri, 06 Sep 2024 19:22:52 +0000

Transcript

My name is Evan Kaufman, your VA loan originator, here to help explain fixed rate vs ARMs.

When you hear “fixed rate” versus an “ARM” (adjustable rate mortgage), what is really the difference between the two?

Well, a fixed-rate mortgage is simply that—you have fixed the rate of the loan for the life of the loan.

So, you might have heard, “Oh hey, I got a 30-year mortgage, or a 15-year mortgage and it’s fixed.”

That means for that full term of the loan—be it 15 or 30 years, or really anywhere in between (we can do like a 21- or 22-year mortgage if you want)—the rate is fixed for the whole time.

An ARM simply means an adjustable-rate mortgage.

The concept there is that your rate will actually adjust over the life of the mortgage.

So, if you ultimately—let’s say for ARMs—the key is to understand what your time frame is for it to potentially adjust. It could be something like a 3, 5, or 7-year ARM. That means after three years, your rate will be X, but then at the three-year mark, your rate could adjust upward by so many percentage points, as stated in the loan documents.

One thing to note is that, typically, if it’s a conforming loan, you should have a fixed ceiling as to how far that mortgage rate can actually go up at those intervals.

If you don’t, it could be the Wild West—that’s what happened in 2008 and 2009, with things blowing up because there really were no restrictions on how far a rate could go up.

But ARMs today typically have restrictions on how much rates can actually increase at those intervals over the term of the loan.

So, are ARMs really that bad? Upfront, I would say they’re not usually as ideal as a fixed-rate mortgage because with a fixed rate, if the world blows up or something happens, at least you know what your payment is going to be consistent.

Some people still like ARMs because, in the short term, they can be somewhat beneficial.

However, if we’re in an environment like we are now (as of shooting this video in 2024), there’s what’s called an inverted yield curve, where, weirdly, short-term interest rates tend to be the same or even worse than long-term interest rates.

So, over the last couple of years, ARMs—adjustable-rate mortgages—really haven’t been a much better deal than fixed-rate mortgages.

Typically, you’d have it where ARMs would have a lower interest rate than a fixed rate, but there’s the risk of it adjusting later on.

Lately, ARMs have been the same or even higher than fixed rates, so it’s made ARMs a no-brainer not to do.

But as that inverted yield curve starts to change—which is very possible in the future—then, all of a sudden, if ARMs start having significantly better interest rates than fixed-rate mortgages, there could be scenarios where an ARM might make sense again.

Personally, I might still recommend a fixed rate so you have certainty, just in case something happens.

But I know even from personal experience, if you know you’re going to pay that debt off—let’s say in the next few years, you’re getting really aggressive with it, or you know some money is coming from somewhere, and you’re going to try to knock it out—whatever the case, if you plan to pay it off in 3, 5, or 7 years, then an ARM might give you a better rate for that period.

And if you’re trying to pay it off quickly, you might actually come out ahead because it was a lower interest rate than a fixed-rate mortgage.

However, if something goes wrong in that payoff plan, be ready—because when it comes time for the rate to adjust, it could have a negative impact if rates happen to go up when that adjustable-rate mortgage portion kicks in.

So, are ARMs bad?

I would say, hey, be cautious of them.

Whenever you hear someone saying, “Hey, maybe you should consider doing an ARM,” you just want to be really careful about what you’re getting into because there are some extra variables there that you don’t usually have to worry about with a fixed-rate mortgage.

Over the last few years, by most standards, the fixed rate has been the no-brainer option.

However, if rates start to normalize, and bond markets overall kind of normalize, we could see ARMs, those adjustable-rate mortgages, start to have better and better rates.

But it’s still for the short term.

So, it’s really important to work with a lender who can help walk you through that and explain what you’re seeing.

I hope this helped explain a little bit about the difference between fixed-rate and adjustable-rate mortgages.

And remember, the relationship between the two might change in the future.

It’s always in flux, depending on what the overall mortgage market is doing.

My name is Evan Kaufman, your VA loan originator, here to help explain. Take care!

Why Are Interest Rates Going Up?

matt — Fri, 26 Apr 2024 16:13:10 +0000

Transcript

Why are interest rates going up? My name’s Evan Kaufman, your VA loan originator, here to help explain the recent rise in mortgage interest rates.

So right now, it’s early 2024 and if you recall, over the last few years, we’ve seen interest rates rise dramatically from their all-time lows of 2020, 2021, and early 2022.

But last year, if you remember, the end of ’23, we actually saw some relief, rates came down a bit.

Why?

Because everyone was expecting that hey, inflation’s going to calm down, all of a sudden, the Federal Reserve is going to cut back interest rates to help make sure people are going to keep spending money.

But here’s an adage I’ve noticed in our industry, and mortgage as a whole, and real estate as well, and that is that everyone’s assuming cuts are coming, everything’s going to speed back up because cuts are coming.

They’re coming, they’re coming, they’ve been coming now for a few years, ever since 2020, 2021, when we knew rates were going to hike up, in early ’22 when they started to hike up, everyone was calling for them to start falling late ’22, then early ’23, then end of ’23.

Now here we are beginning of ’24 and rates are looking like they might stay elevated for longer than expected.

Now the reason why for all this is – it comes back to everyone’s assumption that the Federal Reserve is going to lower interest rates in the near future.

However, the Federal Reserve looks at a few key indicators to decide if they’re going to move their mortgage rates.

Now another side note, just because the Federal Reserve lowers their interest rate or raises their interest rate doesn’t mean mortgage rates necessarily go up or down.

While they go closely together, they’re not perfect.

However, for the sake of it, we’re just going to say the Fed lowers rates, we know generally mortgage rates are going to go down, and in reverse, if they raise them, they generally going to go up.

Here’s the deal, everyone assumed that the Fed was going to cut rates a few times in 2024, but inflation data has proven higher than anticipated and jobs have stayed stronger than anticipated, meaning that there’s really no reason for the Federal Reserve to cut interest rates, and now all of a sudden people are starting to realize, ‘Oh, that might not happen.’

So ultimately, rates are staying higher for longer because folks are pushing back their horizon on when they see the Federal Reserve potentially cutting interest rates.

Good news is, we’re lower than where things were towards the third quarter of ’23 – we saw the highest rates that we’ve seen in a long time – they calmed down quite a bit earlier this year.

Man, you could have some really good deals, we’re locking folks in for refinances, for example, VA IRRRL streamline refinances at really good rates.

But now they creep back up because folks are all of a sudden noticing, ‘Oh no, the Federal Reserve might not actually cut those rates for a while because the economic data is doing better than expected.’

One of the grim realities of working in mortgage is that good economic news means that rates generally are going to stay higher and/or higher for longer.

That’s because when things are good, there’s no real reason to cut rates down.

So, keep that in mind and the sad reality is when things are going poorly, generally that’s when rates go down, which can be good for consumers and good for our business.

It’s one of those grim things where it’s like, are you cheering for or bad data and sad with good data?

The reality is we should still be happy with the positive data even if that means you and I happen to be paying more for our mortgages.

Hopefully, things continue to keep moving and doing well, however, I know for some of us it’s still pretty painful and that definitely can be.

Just know that overall here, we need to start seeing inflation data coming down and jobs, they gotta stay kind of the same and not just continuing to grow at the pace they are, if we want to see mortgage rates come down at all.

My name is Evan Kaufman, again, your VA loan originator here, just giving you a mid-market update on what we’ve seen with rates just over the past couple weeks. Take care.

Are Interest Rates Dropping?

matt — Tue, 12 Dec 2023 18:25:00 +0000

Transcript

December 12, 2023

Now, over the past 30 days, we’ve seen interest rates dropping. Now, this is interesting considering that literally just three, four months ago, interest rates were hitting all-time high.

Conventional loans were hitting high sevens, even into the eight percentage points. On VA loans, which is what we do primarily, we were seeing interest rates get up close to 7%. Pretty darn wild.

But over the past 30-40 days, we’ve seen interest rates recede dramatically, and that’s a big benefit for a lot of us. So, we want all our agents and the folks looking out, they’re buying right now.

This video is being shot early December 2023, so things always change in the future, but just know that if you’ve been looking at homes the last month or two and rates have felt very high, they’ve pulled back a bit.

So, we’re looking at rates where they were three to five months ago, which is really wonderful. So, if you happen to have taken out a VA loan say three to five months ago, your interest rate on a VA loan, let’s say was maybe around seven and a half percent, something like that, you now are getting close to having that opportunity to do an interest rate reduction, or finance loan streamlined refi. We have plenty of videos on that.

If you stepped out of the market, we have a lot of clients that just stepped out as rates kept pushing up, conventional especially, it was getting up there in the mid-sevens. I know some lenders are even up in the eights.

Now, we have the chance to step back in as conventional rates are pulling down. We’re seeing low sevens, even high sixes on conventional loans, which is just wonderful. So, know that right now, interest rates are pulling back a bit, hopefully can get you back out there to go buy a home.

But here’s the other thing, why is that?

Well, the FED has come out pretty clear and said, “Hey, we’re right now positive rates for the foreseeable future.” And there’s even been some talk about cutting them in the next year, in 2024.

So, that’s got some folks excited.

Personally, don’t get your hopes fully up for that, but there’s a good chance that we’re just going to hold where we’re at because economic data has come in a little bit softer.

You never want to wish for bad news, but right now, the bad news is making it so the rates are holding and actually coming down on mortgages, which is pretty darn powerful for us, especially in the real estate and the mortgage business.

So, know that rates have pulled back from those all-time highs that we were talking about just a couple of months ago, and now we’re kind of how we were a little bit earlier this year. Hopefully, gives people some breathing room.

We’re starting to see some more consistency in the FED decisions, which is making people calm down a bit.

Investors are getting more comfortable with buying mortgage-backed securities, which is helping decrease the mortgage spread between a 10-year Treasury and mortgage rates.

That’s essentially a lot of jargon for saying, “Hey, rates are coming back down a bit. Let’s go out there and win some homes.” My name’s Evan Kaufman, your loan originator. Take care.

How Does War Affect Interest Rates?

matt — Tue, 24 Oct 2023 15:46:26 +0000

How Does War Affect Interest Rates?

With conflicts erupting worldwide, the impact on various aspects of the economy, including interest rates, has become a subject of curiosity for many. Recent events, such as the Israeli conflict and the ongoing Ukrainian crisis, have reignited discussions about how wars influence mortgage interest rates. In this article, we’ll delve into this complex relationship and explore the short-term and long-term consequences of global conflicts on interest rates.

The Short-Term Effect

When a conflict breaks out, one of the immediate reactions in the United States is a drop in mortgage interest rates. Why does this happen? The answer lies in the concept of a “flight to safety.” During times of uncertainty and upheaval, people seek refuge for their finances in safe and stable assets. Historically, the United States and its currency, the US dollar, have been seen as a haven for investors during turbulent times.

Investors from around the world tend to shift their money into the US, investing in instruments like US Treasury bills and notes, which are considered highly secure. This increased demand for US Treasuries allows the US government to offer lower yields, reducing interest rates on these securities. The 10-year Treasury yield, in particular, has a strong correlation with mortgage interest rates. When Treasury yields drop, mortgage rates typically follow.

The Long-Term Implications

However, it’s important to note that this drop in interest rates is a short-term effect. Wars create uncertainty, which tends to cause volatility in the financial markets. While initial reactions may lead to lower mortgage rates, the long-term consequences are less predictable. Conflict introduces a level of instability that can make it challenging to forecast where mortgage rates will ultimately settle.

The Long View

In the grand scheme of things, a conflict’s impact on interest rates is a small part of a much larger picture. While some may cheer for lower interest rates in the short term, it’s crucial to consider the long-term sustainability of the global economy. Conflict is detrimental on multiple fronts. It leads to loss of life, disrupts societies, and destabilizes regions. As a company working for those who serve in the military, we can attest to the fact that war and conflict are far from desirable outcomes.

In addition to the human toll, a conflict-ridden world is not conducive to economic growth and stability. So, while lower mortgage rates might seem appealing in the short term, they should not come at the expense of peace and global security. We should always prioritize long-term prosperity and international harmony.

I hope this has shed light on the complex relationship between conflicts and interest rates. If you have any more questions or need further information, feel free to reach out to us. Take care.