Hi everyone,
There was a little breathing room for mortgage borrowers late last week. Lenders improved pricing Thursday, and Mortgage News Daily reported another small improvement Friday. That was happening even as Freddie Mac's weekly average moved higher.
So which headline should you use? Start with when the numbers were measured. Then bring the conversation back to what the home would actually cost you each month.
How can rates be up and improving?
Freddie Mac's October 8 weekly average for a 30-year fixed mortgage was 7.40%, up from 7.28%. But the survey covered October 1–7. It didn't include Thursday or Friday's changes, and it isn't a quote for your loan today.
Mortgage News Daily's Thursday analysis pointed partly to investors becoming more willing to buy bonds at the higher returns available. That helped mortgage pricing improve. It wasn't a clean reaction to one economic report.
Some lenders carried part of Thursday's improvement into Friday's offers, rather than passing it all along immediately. By Friday, the publication's daily measure was at its lowest level in two weeks. That's a different measurement from Freddie Mac's weekly survey.
I'd take the improvement as a reason to refresh your numbers if you're actively shopping or considering a refinance—not as a promise that rates will keep falling. A headline can describe the market without describing the offer available to you.
What would it take for housing to feel affordable again?
Redfin explored that question in a new analysis last week. In one hypothetical scenario, housing costs return to their earlier relationship with incomes in roughly five years if mortgage rates fall to 6%, home prices grow around 2.1% annually and incomes follow the study's assumptions. That's a scenario, not a prediction.
And “normal” has a specific meaning here: the relationship between mortgage payments and incomes back in August 2018. Returning to that relationship doesn't necessarily make a home affordable for a particular household, especially in an expensive market.
I'd use that as context, not a countdown to when you should buy. Your own budget is a much better place to start.
Strategy Corner
Can you use your equity without giving up your mortgage rate?
Yes. A cash-out refinance isn't the only way to borrow against your home. A home equity loan or HELOC can sit alongside your existing mortgage, so you keep that loan and add a separate debt.
Home equity loan: You receive a lump sum. Check whether the rate is fixed or adjustable; a fixed-rate option can make the payment easier to plan around.
HELOC: You can draw money as needed during the borrowing period, up to the available limit. Rates are usually variable, and payments can rise when the borrowing period ends and repayment begins.
Cash-out refinance: You replace your existing mortgage with a larger one and receive cash from the difference. That means considering the new rate on the whole mortgage, not just the extra money you're borrowing. Closing costs matter, too.
Here's a hypothetical: you owe $300,000 and want $50,000 for renovations. A separate equity loan could leave the $300,000 mortgage in place. A cash-out refinance would replace it with roughly $350,000 before fees. That's why I'd compare the total cost of both paths, not just the rate advertised on the new borrowing.
Ask for a side-by-side comparison of combined payments, fees, repayment terms and how payments could change. Keeping your existing mortgage doesn't automatically make the second loan the better deal.
These options depend on qualifying, and the debt is secured by your home. With a HELOC, available credit can also be reduced or frozen in certain circumstances. Borrow only with a repayment plan you can comfortably handle.
3 things I'm watching this week
October 12–18; all times Eastern.
Wednesday, October 14, 8:30 a.m.: Are consumer prices cooling? September's CPI report gives us a fresh inflation reading after last week's improvement in mortgage pricing.
Thursday, October 15, 8:30 a.m.: What are producers receiving for their goods and services? September's PPI report looks at price changes from the seller's side, adding another piece to the inflation picture.
Thursday, October 15, 8:30 a.m.: Are shoppers still spending? September's advance retail-sales report will help us gauge demand.
Wondering whether a HELOC could make sense for you? Reply with your question—I'm happy to walk you through how it works and what to consider.
I would bold only the opening question to make your CTA noticeable without adding a button. Since you're inviting people to reply directly to the newsletter, a button isn't necessary.
Jessica Eiroa
Mortgage Loan Officer | NMLS #1380149
Five Star Mortgage | Company NMLS #1756744
702-285-0633
[email protected]
eiroahomeloans.com
Educational Disclaimer:
This newsletter is for educational and informational purposes only and is not a commitment to lend. Mortgage rates, programs, terms and availability are subject to change and borrower qualification. This information is not intended as tax, legal or financial advice.
Five Star Mortgage
2629 W. Horizon Ridge Pkwy Suite 140
Henderson, NV 89052