How Soon Are Costa Mesa Mortgage Interest Rates Expected to Rise?
Last week, on the heels of a jobs report that completely missed expectations, Costa Mesa mortgage rates dropped dramatically to 1-month lows settling in around 4.5%. The fact that only 74k new jobs were created in December when estimates were closer to 200k, helped save homebuyers from a jump in rates—keeping them lower longer than anticipated by experts.
However, most analysts believe that mortgage rates will rise in 2014. But the question is when? In my 2014 Costa Mesa real estate predictions post, I highlighted that I thought they will rise later in the year.
When Will Interest Rates Rise?
The Fed’s decision to cut back its mortgage-bond buying by $10B this month signals that the stimulus tapering is officially underway. And the time leading up to Bernanke’s departure in February could result in major market turbulence.
These two factors alone could have majorly impacted mortgage rates had the employment data not been so poor. However, if the jobs report redeems itself for January, we could see the scales tip towards the consensus that mortgage rates will rise sooner than later…along with a possible uptick in interest rates.
Until then, paying close attention to employment numbers and market movement will give you a read on what to expect. Weak employment data typically pushes mortgage rates lower. The further it deviates from expectations (for better or for worse), the more swings in rates we could see.
That being said, if you’re a Costa Mesa homebuyer who wants to get in while rates remain relatively low, contact your loan officer today to lock it in before we see rates rise once again. We also can recommend great lenders if you do now know one in Costa Mesa circles – let us know for a referral.
What the New Qualified Mortgage Rules Mean for Homebuyers
On January 10th, the Consumer Financial Protection Bureau’s (CFPB) new Qualified Mortgage (QM) rule under the Truth in Lending Act went into effect.
Consumer protection is high priority for the CFPB after the long road to recovery the housing market has traveled since late 2007. That’s why this new QM rule was created—to help prevent the same situation we saw just seven years ago.This regulation focuses mainly on the “ability-to-repay rule” and was created as an attempt to make mortgages safer. The QM rule takes new measures to thoroughly assess long-term repayment factors such as borrower’s income, assets, debts, and credit history. In addition, the new QM rules implement clear guidelines aimed at protecting consumers’ rights in order to aid in the prevention of a flood of foreclosures like we’ve witnessed in the past.Here are a few basics of what the new QM rules mean for borrowers:
- Generally speaking, QMs will be available to homebuyers who have a total debt-to-income ratio equal or less than 43%.
- QM limits the amount of points (fees or prepaid interest on a mortgage) to 3% of the loan’s value.
- Mortgage servicers are now required to send a clear monthly statement so that you can confirm how they are crediting your payments. Any mistakes in payment allocation are required to be fixed promptly.
- If you have an adjustable rate mortgage, servicers are now required to give you early notice if your rate is about to change.
- An increase in options for borrowers who are either delinquent or having difficulty paying their mortgage. Under the new CFPB rules, foreclosure cannot be initiated until the borrower is more than 120 days delinquent so that borrowers have time to submit an application for loan modification.
- Features considered to be “risky” such as negative amortization or interest-only payments are no longer allowed in QMs.
QMs are readily accessible, too. Loans guaranteed by Fannie Mae/Freddie Mac, loans insured or guaranteed by the FHA, or loans that fall under HUD rules are available.
These new rules should help further the housing market’s recovery and potentially prevent a collapse like we’ve seen when as many safety features weren’t in place—ultimately protecting homebuyers from getting into loans obligations that they can’t fulfil over the long term.
