How Financing Options are Affected by the Rise & Fall of Federal Reserve Interest Rates

By
Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI
https://activerain.com/droplet/5kQM
 
 
How Financing Options are Affected by the Rise & Fall
of Federal Reserve Interest Rates
 
 
 
My phone is ringing off the hook these days ...

The latest move by the Federal Reserve has garnered lots of attention and piqued the interest of many.  Many of my callers are wondering:
 
  1. Have mortgage interest rates fallen?
  2. If so, how much have they fallen?
  3. How might this affect my current mortgage?
  4. How does this affect the financing options I have?

Answering those questions is not as easy as it might seem, as each caller     (and consumer) possesses their own individual financial standing and credit history.  As a result, their financing options and opportunities are personal only to them and unlike anyone else's.  

That, of course, means I must ask questions and gain information before I can give solid reliable answers and mortgage advice.  A fact-finding dialogue between caller and lender is needed to successfully accomplish that.  


Again, the answers I provide each caller will be based on the individual caller/consumer's personal finances, personal credit, personal credit history, and more. The answers will be very specific to them.

But while it's important to remember the uniqueness and individuality needed in this process, it's also important to point out that there are some unchanging universal truths to be found as they pertain to the Federal Reserve and interest rates.  

The first is that the Federal Reserve rate does affect us all.  But it affects us in a variety of ways.  It's also true that how much it affects you is dependant on your financial "lifestyle" and financial choices.  

So what are some of the ways the Federal Reserve rate increases/reductions can most commonly impact consumers? 

Those are: 

  • Credit Cards:  The majority of credit cards held by consumers feature variable interest rates.  Those rates are tied to what they call the "prime rate".  The prime rate is determined by the Fed Rate.  The Fed Rate is the overnight rate used by banks when they lend to one another.
  • Auto Loans:  If in the market for a car, you might see a slight rise or fall in the interest rate charged on an auto loan (dependant on a Fed rate increase or decrease).
  • HELOC:  The link between Federal Reserve Rate increases and decreases and loans is felt more directly should you have a Home Equity Line of Credit, a/k/a HELOC.  If the increase/decrease is minor, such as with our most recent change (1/4%), it's likely that you will see a similar 1/4% change in your HELOC rate.
  • Savings Accounts/CD Rates:  Lower Federal Reserve rates can mean that your savings accounts/money market accounts/CDs reap a lower rate of return.

And the main focus of concern for my callers ...
  • Mortgage Rates:  Like many relationships, the relationship between the Federal Reserve and mortgage interest rates can be somewhat complex.  And hard to predict.       

Why are they hard to predict? 
 
  1. Mortgage interest rates are actually more reliant on the 10-Year Treasury Yield and the trading of mortgage-backed securities.  
  2. The effect or outcome felt by Federal Reserve increases/decreases are not written in stone and can be quite unpredictable.  The results reaped one time may not be the same reaped during another similar scenario.  
  3. Results may buck historic trends and reap just the opposite of what would have typically been predicted.  (We've seen that happen more frequently as of late.)  In other words, other factors can weigh more heavily on the direction of mortgage interest rates than Federal Reserve Board rate cuts or increases.  
  4. The state of the economy and world events also contribute greatly to the unpredictable nature of mortgage interest rates.  Because of that, interest rates can change quickly.


Each of these things contributes to the complexity and challenges faced by mortgage lenders trying to quote/predict interest rates (and their future movement) for their clients.
       
Consider this scenario:  Have you ever driven by a gas station in the morning and noted the price only to return later during the afternoon and find that the price has changed?  Mortgage interest rates can do much the same.  

An interest rate that was available to a consumer in the morning may be unattainable later in the day.  Things can change that fast.  Consumers and lenders alike need to remain vigilant these days.  (Note: During times of market volatility, the importance of locking-in a mortgage interest rate with your lender in a timely manner only grows). 
  
For consumers that are already mortgage-holding homeowners, currently in the home buying/refinancing process, or considering the purchase/refinance of a home or investment property ... bells and whistles can sound upon hearing of a Federal Reserve rate hike or decrease. And they have been, as they're contributing greatly to the number of phone calls I've been receiving.

As a Chicagoland Mortgage Originator, I welcome the opportunity to discuss Refinance options.  As I recommend to all my clients and referral partners, I feel it's best to discuss options one-on-one with the buyer, as no two deals are ever alike.  

So for those seeking answers to these questions ...

  1. Have mortgage interest rates fallen?
  2. If so, how much have they fallen?
  3. How might this affect my current mortgage?
  4. How does this affect the financing options I have?

There is no magic formula or answers to your personal financing questions that can be easily shared here in writing.  Mortgage financing has become that personal and individualized.

No, the information you need to accomplish your goal can be found through only one method.  Our working together.  

The answers we arrive at will then be based on YOUR needs, YOUR credit, YOUR finances, YOUR desires.  Then and only then will you have the knowledge and information you need to move forward.
 
 
 
* Hoping to buy or refinance a home or investment property in New Lenox - Will County or elsewhere in the Chicagoland - IL - WI area?

Contact me today. I'll put my 40+ years of mortgage experience hard to work on your behalf.
I'm easily found at:
 
 
Gene Mundt
 
Mortgage Lender - NMLS #216987 - IL Lic. #0006220 - WI Licensed

 
American Portfolio Mortgage Corp.
NMLS #175656
 
 
 
Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281
 
 
 
 
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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

 

Your Referrals & Testimonials are Always Greatly Appreciated! 

 

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Sally K. & David L. Hanson 09/28/2019 03:26 AM
Topic:
Lending / Financial
Location:
Illinois Will County New Lenox
Groups:
Realtors®
Mortgages
Chicago Area Real Estate BUZZ!
Buyer Information - What Buyers Need to Know in Today's Market
Bananatude
Tags:
interest rates
mortgages
financial markets
federal reserve board
fed rates
refinance
refinancing tips

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Rainmaker
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Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

You definitely captured the nuances of all the contractual ins and outs, Gene! It gives the post a nice evergreen quality. :)

Sep 26, 2019 10:57 AM #1
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Anna Banana Kruchten CRB, GRI, WLS
Phoenix Property Shoppe - Phoenix, AZ
603-380-4886

Hi Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi oh yes there as been a lot of buzz in the air about interest rates this past month or so. Many folks were able to re-fi at a very low rate which is great.  Excellent explanation of the Fed rates and what they mean......and all the rest! 

Sep 26, 2019 12:54 PM #2
Rainmaker
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Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Gene,

As per your usual style of clarity, you gave a very clear explanation of what is what in the lending/mortgage field.  Happy Thursday.  A

Sep 26, 2019 12:56 PM #3
Rainmaker
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Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Another great informational post, Gene. I learn so much from them all. And so will my readers 

Sep 26, 2019 03:21 PM #4
Rainmaker
3,838,871
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

 Good evening Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi ,

You always spell out clearly what is going on and why! Great explantion of the Fed rates and what they mean. Definitely have clients benefit.

Sep 26, 2019 05:19 PM #5
Rainmaker
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Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Good morning, Gene... and that is precisely why when people ask me where interest rates stand on any given day I tell them they need to speak with a lender... because so many more factors go into a rate than just what's published.

Sep 27, 2019 04:25 AM #6
Rainmaker
255,268
Doug Kaller
Academy Mortgage, Reno, NV - Reno, NV

It has been my experience that the investors build the expected changes into their pricing over the weeks leeding up to a Fed decision. It is almost impossible to antisipate the effect of a Fed decision. Rates got noticibly better when the fed lowered their rate earlier this summer yet the most recent decision has resulted in higher rates. In both instances, the Fed lowered the overnight rate by .25% yet the results were polar oppocites. 

Sep 27, 2019 10:12 AM #7
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Gene good job in pointing out how the rates impact many more things other than mortgages, and effect our ability to purchase.

Sep 27, 2019 03:36 PM #8
Rainmaker
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Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

We are seeing bunches of activity as well...time to get your track shoes on Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi 

Sep 28, 2019 03:24 AM #9
Rainmaker
3,838,871
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi ,

Me again...Great traction with this post..glad that Sally K. & David L. Hanson re-blogged and sure there will be many more. You have made this so easy to understand and know many others need to read this post to understand.

Sep 28, 2019 05:43 AM #10
Rainmaker
2,475,183
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

What civilization has to watch for is how we complicate what should be simple. Professionals exist to do just that. Some do it better than others. Keep "it" simple

Sep 28, 2019 06:05 AM #11
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Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

I also greatly appreciate your style of writing, it makes it so easy to digest this information, Gene. My local lender partners tell me they have spent a lot of time this year with refi loans. Several of our former buyer clients have called me to ask for a lender referral for a refi. We paid cash for our house, but if we had a mortgage, we would have also jumped into the fray.  

 

Sep 28, 2019 08:21 AM #12
Rainmaker
2,782,358
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I’ve seen things like this happen before and usually adjustments are made pretty quickly

Oct 07, 2019 09:30 PM #18
Rainmaker
2,782,358
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I’m not sure what Henry is talking about. Is that comment spam? You might check that out.

Oct 07, 2019 09:31 PM #19
Rainmaker
418,187
Suzanne Strickler
Realty Mark Associates - Havertown, PA
School is never out for the Successful.

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi  ~ Very thorough explanation of the workings of the FED. Jerome Powell should be so well versed!

Nov 07, 2019 09:09 AM #22
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Rainmaker
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Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

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