Interest Rate Trends

pixiegirl

pixiegirl

Cleopatra Jones
Is there any rhyme or reason to them at all. I've been told a good rule of thumb is to watch the gas prices and rates usually go up and down with them. Do they follow any other trends like the season? Typically go up or down a little in the summer or no?

We're thinking about possibly taking out a home equity loan or loc and doing some stuff around the house and possibly paying off my car and selling her on the street for cheap (mileage :ohwell:) and getting a more wallet friendly car.

These talks are just in thier infancy mind you. I notice that loc rates are running a little lower then loan rates. This is typical I guess. What are the major differences, payment terms, etc?
 
FromTexas

FromTexas

This Space for Rent
Home loans are tied to the 10-year treasury more than anything else (as a quick indicator), but the interest rates are mostly driven by the Fed changing the monetary rates and fluctuations due to inflation (which is what drives the fed in the first place). Basically, the Fed raises rates so the interest rates go up. In addition, the market hedges against future increase by raising the interest rates to match inflation risk... because if inflation is a problem the fed will be raising rates each quarter. So... part is current Fed rate and part is a predicted Fed rate. Gas, due to its recent cost volatility, is typically discounted from the inflation models (i.e. there is much less inflation if you remove energy costs from it because its an outlier).

Do not expect the mortgage rates to fall any in the next year other than slight dips here and there as it continues to moderately increase. The Fed has raised rates a number of times in the past year, and while the Fed has signaled they may slow or stop the increases, the rate will definitely not decrease.
 
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pixiegirl

pixiegirl

Cleopatra Jones
FromTexas said:
Home loans are tied to the 10-year treasury more than anything else (as a quick indicator), but the interest rates are mostly driven by the Fed changing the monetary rates and fluctuations due to inflation (which is what drives the fed in the first place). Basically, the Fed raises rates so the interest rates up. In addition, the market hedges against future increase by raising the interest rates to match inflation risk... because if inflation is a problem the fed will be raising rates each quarter. So... part is current Fed rate and part is a predicted Fed rate. Gas, due to its recent cost volatility, is typically discounted from the inflation models (i.e. there is much less inflation if you remove energy costs from it because its an outlier).

Do not expect the rate to fall any in the next year other than slight dips here and there. The Fed has raised rates a number of times in the past year, and while the Fed has signaled they may slow or stop the increases, the rate will definitely not decrease.
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So what you're telling me is :jameo: get on it now?
 
MMDad

MMDad

Lem Putt
FromTexas said:
Home loans are tied to the 10-year treasury more than anything else (as a quick indicator), but the interest rates are mostly driven by the Fed changing the monetary rates and fluctuations due to inflation (which is what drives the fed in the first place). Basically, the Fed raises rates so the interest rates up. In addition, the market hedges against future increase by raising the interest rates to match inflation risk... because if inflation is a problem the fed will be raising rates each quarter. So... part is current Fed rate and part is a predicted Fed rate. Gas, due to its recent cost volatility, is typically discounted from the inflation models (i.e. there is much less inflation if you remove energy costs from it because its an outlier).

Do not expect the rate to fall any in the next year other than slight dips here and there. The Fed has raised rates a number of times in the past year, and while the Fed has signaled they may slow or stop the increases, the rate will definitely not decrease.
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http://realestate.yahoo.com/loans/

You can see graphs with five year trends. There is no seasonal pattern.

Predicting where they are going can be rough, but I'll side with FT in thinking they aren't on the way down any time soon.
 
FromTexas

FromTexas

This Space for Rent
MMDad said:
http://realestate.yahoo.com/loans/

You can see graphs with five year trends. There is no seasonal pattern.

Predicting where they are going can be rough, but I'll side with FT in thinking they aren't on the way down any time soon.
Click to expand...

Predicting is a lot easier than people think. You won't be able to predict minor adjustments up or down from week to week, but you can definitely tell what the long term trend will be.

Also, don't use those Weekly Mortgage Survey Rates to decide what you should expect. If you look at the regional section, you will see higher rates for the NE area (which includes MD). In addition, those are rates w/ whatever points it says below it and counted as 20% equity held conventional loans. So, if you are closer to 90-100% financing, your rate will be 1/4-1/2 points higher depending on how close. Also, they are trailing rates (the past week)... anything you are then locking would be going into the next week.
 
moon5leg

moon5leg

It's not easy being green
pixiegirl said:
Is there any rhyme or reason to them at all. I've been told a good rule of thumb is to watch the gas prices and rates usually go up and down with them. Do they follow any other trends like the season? Typically go up or down a little in the summer or no?

We're thinking about possibly taking out a home equity loan or loc and doing some stuff around the house and possibly paying off my car and selling her on the street for cheap (mileage :ohwell:) and getting a more wallet friendly car.

These talks are just in thier infancy mind you. I notice that loc rates are running a little lower then loan rates. This is typical I guess. What are the major differences, payment terms, etc?
Click to expand...

I'd be cautious when comparing LOC's (variable rate) to fixed rate equity loans. If you've got your loan amount in mind, and plan on spending it all right away, I'd suggest going with the fixed rate equity loan. It's safer for the long term.

The problem with the LOC's is the variable rate. The rate may look attractive at first, but can go up at any time, and many times. I had a variable rate HELOC with Wells Fargo, before my first payment was even due, I received a letter that my rate had gone up 3/4%!

Switched to a fixed rate equity loan with Navy FCU and can breathe alot easier now.
 
Chasey_Lane

Chasey_Lane

Salt Life
Kwillia mentioned some good points regarding LOC's not too long ago in a thread. Seems like a good idea to me, especially for quick home improvement projects.
 
kwillia

kwillia

n/a
Chasey_Lane said:
Kwillia mentioned some good points regarding LOC's not too long ago in a thread. Seems like a good idea to me, especially for quick home improvement projects.
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If you plan to pay it off in a few months, rather than years, than I think it's the way to go because the convenience is definately worth the extra interest cost. But if you plan to do a major project or purchase and would rather pay it off over a few years, than it would cost you more in the long run. I love my LOC.
 
Chasey_Lane

Chasey_Lane

Salt Life
CityGrl said:
From someone who just purchased a home, rates are increasing. Lock in now.
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My dad told me that shortly before I was born, interest rates were in the teens and that was the norm. :faint: I can't remember how long it lasted, but could you imagine the same scenario today? :shocking:
 
P

Pandora

New Member
Chasey_Lane said:
My dad told me that shortly before I was born, interest rates were in the teens and that was the norm. :faint: I can't remember how long it lasted, but could you imagine the same scenario today? :shocking:
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The interest rate on my Carrington townhouse was 10.75% and that was considered a good rate and it had really dropped from earlier in the decade. That was in 89. I was thrilled in 92 when I refinanced for 8 1/2 percent.

Believe it or not, that was once a really nice neighborhood. I drove by there about a week ago and it is ghetto. My old townhouse had towels hanging in the windows as curtains. :bawl:
 
Chasey_Lane

Chasey_Lane

Salt Life
Pandora said:
The interest rate on my Carrington townhouse was 10.75% and that was considered a good rate and it had really dropped from earlier in the decade. That was in 89. I was thrilled in 92 when I refinanced for 8 1/2 percent.

Believe it or not, that was once a really nice neighborhood. I drove by there about a week ago and it is ghetto. My old townhouse had towels hanging in the windows as curtains. :bawl:
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I lived there a few years ago with some roomies. It was just starting to get ghetto. But...what do you expect, it's Waldorf. :ohwell: :lol:
 
CityGrl

CityGrl

Time for a nap
Chasey_Lane said:
My dad told me that shortly before I was born, interest rates were in the teens and that was the norm. :faint: I can't remember how long it lasted, but could you imagine the same scenario today? :shocking:
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:jameo:

I would still be renting, that's for sure!!!
 
C

czygvtwkr

Guest
Mortgages are still fairly low and will probably stay that way because the fed hikes the short term interest rates. This is why you hear about the inverted yield curve short term rates are higher than long term rates. The Fed's policy has been hiking short term rates, which is the rate that it charges banks for overnight loans, to break inflation and now they are trying to get rid of those interest only loans and ARMs. I bet in a couple years there will be quite a few houses on the market purchased by people with ARMs and interest only loans that will not be able to afford them. Don't look for more than two or three more rate hikes unless oil shoots over $100 a barrel and stays there for a long time.
 
R

remaxrealtor

Guest
pixiegirl said:
Is there any rhyme or reason to them at all. I've been told a good rule of thumb is to watch the gas prices and rates usually go up and down with them. Do they follow any other trends like the season? Typically go up or down a little in the summer or no?

We're thinking about possibly taking out a home equity loan or loc and doing some stuff around the house and possibly paying off my car and selling her on the street for cheap (mileage :ohwell:) and getting a more wallet friendly car.

These talks are just in thier infancy mind you. I notice that loc rates are running a little lower then loan rates. This is typical I guess. What are the major differences, payment terms, etc?
Click to expand...

Hey Pixie! :howdy:

Give Ray a call....he's got some good deals right now!
 
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