September 27, 2022 

The most recent historical high-water market for mortgage rates was "14 years."  It was broken so many times in September that it almost become boring last Tuesday.  Now, less than a week later, 14-year highs would be more exciting than boring.  As of mid-day yesterday, we're officially at 20 year highs.

What's remarkable is that in less than a year, the payment on a new $400k mortgage is up at least $1000/month.  Many lenders are now quoting top tier 30yr fixed rates over 7%.  

Why have rates spiked so quickly?  One might assume is has something to do with last week's Fed rate hike.  After all, the Fed hiked rates and then mortgage rates went higher, but that's actually not the issue at the moment. 

The issue stems from strange goings-on in the realm of fiscal policy in The UK.  Yes, that's an odd thing to consider when it comes to mortgage rates in the US, but it's important to understand just how huge the market reaction to recent events in The UK has been.  Without going into tedious detail, the best way to convey the drama is by noting that British 10yr yields have risen more than 1.00% in 4 business days. 

Contrast that to US 10yr yields which have only jumped by about a third of that.  Also consider that "a third" is a smaller than normal correlation for these two markets.

In other words, the market movement overseas is so big that, even with a far diminished echo, it's been enough for another major jump in rates.  

Don't expect any emergency help from the Fed either.  Multiple Fed speakers were out yesterday reiterating that they're still waiting for evidence that inflation has turned a corner and for evidence that their policies are producing a certain amount of economic pain.  Pain is normally bad, but in this case, the Fed views it as evidence of traction in the fight against inflation.  In any event, at best, it will take weeks and probably months for economic data to open the door for a softer stance from the Fed.  

Bottom line: 7% or close to it is the new 30yr fixed rate reality for now.

Today we are going to discuss two common mortgage loan products, and the pros and cons of both: FHA versus Conventional Loans.
Many people are familiar with the 20% down, good credit 30 year fixed conventional loan scenario. FHA loans are designed for people who have difficulty qualifying for a conventional loan to buy a house.
FHA Loans offer down payments as low as 3.5% and are more lenient on credit scores and past financial issues. Borrowers can qualify for FHA loans with as low as 580 credit scores.
One of the downsides of FHA loans are mortgage insurance requirements, if you put down less than 10% you will be required to pay monthly insurance for the duration of the loan, as well paying Upfront Mortgage Insurance Premium.
The best choice for you? Give us a call or apply online and we will analysis what programs suits your needs 😊