Happy August! I hope everyone’s summer has been filled with swimming, vacations, and successful real estate transactions. The refinance market has been kicked up to another level with interest rates falling near a 3-year low. Everyone who has bought over the past two years should check if they can cut their payments on any properties and increase cash flow! Below are some updates in the lending world to take note of.

The Fed Cuts Rates

Many of our clients and Realtors are asking about the Fed decision to lower the Federal Funds Rate by .25%.

• Does this directly correlate to lower mortgage rates? No! (explanation below)

• Yes, this is the first time this has happened since 2008.

• Why? The move was called an “insurance cut,” one that central bankers are making to keep growth moving along.

“The ultra-short-term Federal Funds rate — an overnight lending rate between banks — has little direct influence on longer-term rates, such as those found on mortgage loans.” You can see since October of 2018 the Fed rate has increased but mortgage rates have decreased. All that said, mortgage rates are near 3-year lows now, so it’s a great time to purchase or refinance!

Fannie and Freddie Change their income Limits on some Programs

As some may or may not know, both Fannie and Freddie have programs called Home Ready and Home Possible that are geared toward the low to middle income bracket. Their particular loans allow for discounted
mortgage products and lower down payment requirements if the borrower fits a certain income limit compared to the area median income. At the end of July, Fannie and Freddie both altered their income limits across the map. If you would like to check if you qualify for one of these programs, we
are always happy to check for you and it is accessible on Fannie and Freddie’s website.

I hope everyone’s summer has been successful thus far, please let me know if you have any questions relating to interest rates. We hope to see you at the next AZREIA meeting!

by Andrew Augustyniak, Peoples Mortgage Company