Rates are going up as Investors are Scared

In my short stint as a Loan Officer I learned a lot about the financial world. From how loans are underwritten to how incredibly messed up this whole country is right now. This is because there are so many people with loans that they cannot afford, at all.

One thing that I enjoyed talking with people about what the interest rate. Everyone thinks that when the Fed cuts their rates then mortgage rates come down too. Well it ain’t that simple. You see the Fed rate is what the banks use to trade money with each other. The interest rates that you and I enjoy are the result of the banks and their investors deciding how much they want to charge for the loan. Just because they can trade money with each other at a cheaper rate does not mean they want to give Joe Blow the same deal. Right now there is so much uncertainty in the markets that I don’t see rates going lower for a while.

With the economy slowing and the Federal Reserve Board cutting interest rates, mortgage rates were expected to come down a bit. That’s not what’s happened, though. Mortgage rates on 30-year fixed-rate loans have actually gone up over the last week.

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Mortgage Rates Rise, Defying Expectations