A couple of months ago I posted a blog about how low interest rates were. Today, I came across this article by Clare Trapasso, Senior News Editor Realtor.com, and thought it would be very interesting for my readers. Mortgage Rates Hit Record Lows. Could They Fall Even Further? One of the few bright spots for home buyers and owners in 2020—a year marred by a pandemic, economic recession, social unrest, wildfires, hurricanes, and a highly polarized presidential election—has been rock-bottom mortgage interest rates. Mortgage rates have been tumbling since COVID-19 disrupted the nation's economy, achieving what many experts had believed was impossible: They dipped just below 3% in July. Rates have since fallen even further, reaching an all-time low of 2.86% for the average 30-year fixed-rate loan in the week ending Sept. 10, according to Freddie Mac. They ticked up to 2.87% in the week ending Sept. 17. Those lower rates have allowed buyers to stretch their budgets at a time when home prices are on the rise. Homeowners who refinance their existing loans can potentially shave $100—or more—off their monthly mortgage payments, saving tens of thousands of dollars over the life of their loans. (The exact amount depends on the size of the loan and the previous rate.) Will the Lowest Mortgage Rates Ever Seen Spur Another Refinance Boom? The Fed Slashed Interest Rates. Here's Why Mortgage Rates Likely Won't Follow Suit Now, many folks are wondering if rates can fall even further—and just how low they might go. The U.S. Federal Reserve pledged on Wednesday not to raise its own short-term interest rates, currently at around 0%, to give the economy a much-needed boost. So could that lead to mortgage rates dropping further? "That's the big question. Are rates going to keep falling? Are they going to rise?" says Len Kiefer, Freddie Mac's deputy chief economist. "The honest answer is, we don't know. Economists have not had much luck in forecasting" where rates will go. The problem is, 2020 hasn't been a typical year. There's never been a pandemic in our lifetimes, and this recession is driven by a virus, not a housing bubble or oil crisis or other economic trouble. And while mortgage rates are influenced by the direction of the Fed's short-term interest rates, it's not uncommon for them to, well, do their own thing. "Technically speaking, mortgage rates could go lower. Theoretically, they could easily drop to around 2%," says Senior Economist George Ratiu of realtor.com®. "However, for lenders [who set their own rates], the likelihood of rates going much lower is pretty slim. They don't want to take the risk of a lower rate over the length of a loan." That's what happened in March. Rates fell to around 3.3% in response to the coronavirus-induced upheaval in the financial markets, and homeowners rushed to refinance their existing mortgages. Lenders were so overwhelmed by the surge in business that they raised their rates to temporarily keep new refinances at bay as they scrambled to catch up. Refinances have since slowed to more manageable levels, and rates have fallen. Why mortgage rates could fall even further—or not For buyers, even lower rates could at least somewhat offset home prices, which have jumped just over 11% year over year, according to the latest realtor.com data. Those low rates can bring previously unattainable homes within reach. So it's understandable that buyers are watching eagerly to see which direction rates will go. "If we were to see the economy struggle a bit, that might cause rates to decline," says Kiefer. "If the economy is stronger than we expected, they might rise a little faster." So what's going on? Bear with us here for a brief mortgage finance breakdown. Rates are determined more by investors than by the Federal Reserve's own rates. Lenders don't want to hold onto the mortgage loans they make, as they want to free up capital to make new loans and profit off those. So they bundle up their mortgages and sell these mortgage bonds, aka mortgage-backed securities, on the secondary market to investors. When the financial markets are all over the place (like this year), investors will often pull money out of stocks and pump it into the relative safety of Treasury and mortgage bonds. These are considered to be safer, long-term investments. Now, mortgage rates are tied to the 10-year U.S. Treasury bond market. So when the bond market is strong, mortgage rates fall. And right now the federal government has committed to buying up mortgage securities, to stabilize the market in the face of this economic downturn. That's led to a surge in demand, which also pushes rates down. "Investors are still clamoring for mortgage bonds because a weak economy and volatile stock markets make a lot of conservative investors nervous," says Ratiu. "Bond investors are attracted to mortgage bonds, because the real estate market recovery is stronger than the rest of the economy." Kiefer points out rates have typically fallen by about 2 percentage points a decade. In the 2010s, they were around 4%. So they could, potentially, fall further into the low 2% range if they keep up that pattern. He believes rates might stay where they are, or fall just a little more, into the 2.75% range. "If you’re in the market for a refinance or a home purchase, rates can move very quickly," says Kiefer. "The rate [you] see this week could be very different next week. There’s a lot of room for rates to move." That means buyers and those seeking to refinance need to have a good grasp of what the numbers mean for them. "You can wait for a basis point lower, but ultimately you have to weigh the trade-offs given the fast-rising prices," says Ratiu. "Home prices are rising fast, so waiting for a lower rate is likely to have little benefit." By Clare Trapasso: Tabasso is the senior news editor of realtor.com and an adjunct journalism professor at the College of Mount Saint VIncent. She previously wrote for a Financial Times publication, the New York Daily News, and the Associated Press. She is also a licensed real estate agent. Contact her at email@example.com.
How Low Will Mortgage Rates Go? They're Now Below 3 Percent If You Know Where To Look One of the few silver linings for real estate in the middle of this devastating coronavirus pandemic has been record-low mortgage interest rates. And housing experts predict those ultra-low rates will likely fall even further—venturing into the unprecedented 2% range. That could give the flagging housing market—deeply hampered by state and local lockdowns, uncertainty about COVID-19, and a sputtering economy — a much needed boost. Lower rates equate to lower monthly housing mortgage payments, meaning many buyers will suddenly be able to afford homes with higher price tags. "We expect mortgage rates to stay low and possibly slip lower," says realtor.com Chief Economist Danielle Hale. "We’ll flirt with the 3% threshold for a while before we go below it." Mortgage Rate Madness: They're Up, They're Down, Where Will They Land? Borrowers Will Find It Harder Than Ever to Get a Mortgage This Spring—Here's Why? Although some lenders are offering rates in the high 2% range, rates averaged 3.28% for 30-year fixed-rate loans for the week ending May 14, according to the most recent Freddie Mac data. That's more than a full percentage point lower than the 4.61% rate for the week ending May 17 last year. That difference could shave hundreds of dollars off some monthly mortgage payments and tens of thousands of dollars off the life of a 30-year loan. Meanwhile, average, daily rates dropped to a new low of 3.09% on May 15, according to Mortgage News Daily. Hale anticipates that rates will fall to 2.9% by the end of the year. That's similar to Fannie Mae's May forecast. The housing giant expects rates to remain in the low 3% range for the rest of the year—and then fall to 2.9% for all of 2021. "Of course, no one can be sure what to expect, because it really depends on how the battle against coronavirus unfolds," Matthew Graham, chief operating officer of Mortgage News Daily, said in an email. "In a situation where people are able to return to work sooner than expected and in greater numbers, rates might not [fall much lower]. On the other hand, the more negative economic outcomes would suggest 2.5% by the end of the year." Borrowers can already get a mortgage in the 2% range Today's buyers can already score rates in the 2% range—that is, if they know where to look. Borrowers seeking a 15-year fixed-rate loan or an adjustable-rate mortgage, where rates fluctuate over the life of the loan, can already enjoy rates in the 2% range. But their monthly payments are likely to be higher as the loan is condensed into a shorter time period. Those seeking standard, 30-year fixed-rate mortgages can also get in on the action. Chase Home Lending was offering buyers rates in the high 2% for purchases in some parts of the country as of Wednesday afternoon. On May 12, national lender United Wholesale Mortgage unveiled a new loan program where folks purchasing a house or homeowners refinancing their loans are guaranteed rates of between 2.5% and 2.99%. Folks with higher credit scores and stronger credit profiles are more likely to qualify for the lower rates. About 10,000 people inquired about the low rates on Thursday, says Mat Ishbia, CEO of UWM. The national lender bills itself as the largest purchase mortgage lender and the second-largest lender nationally, making $108 billion in mortgages last year. Unlike at brick-and-mortar banks, its loans are available only through mortgage brokers. To be eligible, borrowers must qualify for a conventional loan backed by Fannie Mae or Freddie Mac for a primary or vacation home. Investment homes are not included in the program. "It's a great way to get the economy and the [home] purchases started," says Ishbia. "With the pandemic across America ... there's a lot of pent-up demand." Why aren't all mortgage rates below 3%? The question many buyers may be wondering is why all lenders aren't offering such rock-bottom rates. In March, the Federal Reserve slashed short-term interest rates to between 0% and 0.25% to ameliorate the economic carnage wrought by the coronavirus. So why haven't mortgage rates followed suit? The main reason: Mortgage lenders are inflating mortgage rates because of the substantial financial risks that the coronavirus has introduced. Higher rates provide profits—as well as a bit of a financial cushion during uncertain economic times. (It's also important to note that mortgage rates are more closely tied to U.S. Treasury bonds. When bond prices are low, mortgage rates go up, and vice versa.) "We should be under 3% and we're not," says Indianapolis-based mortgage lender Don Frommeyer of CIBM Mortgage. He chalks it up to overall uncertainty about the road forward. "Everybody’s spooked about what’s going to happen." Lenders want to free up capital to make new loans, so they typically don't want to hold on to the mortgages they make. They bundle the loans they make and sell them on the secondary mortgage market to investors. But buyers of these mortgage-backed securities, or mortgage bonds, as they're called, want to make sure they're making profitable investments. If borrowers default on their mortgages, make partial payments, or skip payments entirely because they've lost jobs or income during the pandemic, then investors don't get paid. So they're less likely to want to accept ultralow mortgage rates, which also cuts into their profits, during a financial crisis. And lenders depend on investors to scoop up their loans. "People might have a harder time paying their mortgage right now. That’s why the rate on mortgage goes up," says realtor.com's Hale. "Investors are demanding a higher interest rate because they’re taking on more risk." More than 36 million folks have filed for unemployment since the crisis roiled the American economy roughly two months ago. That's resulted in roughly 4.1 million homeowners requesting forbearance on their mortgages as of May 10, according to the most recent data from the Mortgage Bankers Association. This allows them to miss monthly, housing payments for a period of time. Will mortgage rates in the 2% range boost the housing market? Even interest rates in the mid-2% range may not be enough to spur buyers to make what may be the biggest purchase of their lives in the middle of what's shaping up to likely be another recession. With unemployment reaching levels not seen since the Great Depression and fears that it will likely get worse, many potential buyers are understandably nervous about signing up for 10-, 15-, or even 30-year mortgages. Plus, many lenders are requiring borrowers to have higher credit scores and down payments given all of the financial uncertainty. That's going to make it even more difficult for many folks to get a mortgage and snag those ultralow rates. "It [is] an opportune time to borrow money," says Hale. But "we're probably going to see fewer buyers given all the economic uncertainty." And the new requirements "are naturally going to create some hurdles for buyers to jump over," she adds. By: Clare Trapasso is the senior news editor of realtor.com and an adjunct journalism professor at the College of Mount Saint Vincent. She previously wrote for a Financial Times publication, the New York Daily News, and the Associated Press. She is also a licensed real estate agent. Contact her at firstname.lastname@example.org.
5 Effective Steps for Setting Why Goals
At the start of each year, we are inundated with emails and Instagram posts demanding to know: What are your goals for the new year? We clamor to figure out how to be our best. The gyms are packed and our bookshelves full as we commit to our goals, repeating in our heads, This year will be different. But then the months go by. Goals are forgotten, resolutions covered in the dust of day-to-day tasks, and the mundane running-through-life resumes.
Your goals are now just a guilty reminder of everything you haven’t made time for. You’re not even sure why you tried. And that’s just it: You don’t know why you set the goal in the first place. As a leadership coach, I demand that all goals start with "why." Why do you want to lose weight? Why do you need to read more? Why do you think getting a new job will bring you happiness?
Once a client answers my why question, I ask it again. And again. I ask the question somewhere between three to five times (#brokenrecord), until we finally uncover what’s at the core.
Start With Why For my client who wanted to lose weight—let’s call her Michelle—her first why was so that her clothes would look better. OK, fair; who doesn’t want to fit into their old jeans? On the second why, Michelle said that having clothes that fit would give her more confidence. I heard something change in her voice—now we were getting warmer. On the third why, she shared that she had never felt confident with her appearance. As a result, she’s resisted going after her dream of giving a TED Talk. She couldn’t stand the thought of a crowd staring at her body for 18 minutes. And when I asked Michelle why she wanted to give a TED Talk, she broke into tears, "I want to share my story—my fight with obesity and body image—so that I can help even one young girl not suffer the way I have." We both sat in silence. Michelle’s goal was about much more than weight loss. We had given voice to the why of Michelle’s goal, and it would never be tossed aside again.
When you surface the meaning behind your goal and give it a voice, a simple goal shifts into a mission. Not all goals will have tears and a heart-wrenching story, but you’d be surprised at how many are grounded in values and purpose. And when you can surface that meaning and give it a voice, a simple goal shifts into a mission. With your why front and center, it’s almost impossible to turn your back and not go after it.
Why Why Matters In his book, Start With Why, Simon Sinek shares the biology of why why matters. Inside that big brain of ours, we have two levels: the limbic brain and the neocortex. Our limbic brain holds the reigns of all feelings, human behaviors and decision-making. It has no capacity for language; it’s where our "gut decisions" come from. So when you do things that just "feel right," know that that’s your limbic brain at work. Meanwhile, the neocortex is the responsible side of our brain, from where all of our rational thoughts derive. And while the neocortex can make a great argument, it turns out that the limbic brain is quite powerful, often contradicting and beating out our rational neocortex.
So now think about how this might work with your goals. Your neocortex has all the reasons why you should go to the gym, eat healthier, work harder, but your limbic brain knows what feels good. And getting up early or passing on that glass of wine doesn’t feel quite as delectable. So, your goals have to feel good. And those feel-good goals come from giving voice to your why. When you hit on the values and emotions that drive why you want to achieve a goal, a light goes off in the limbic brain and kicks your body into action.
How to Set Why Goals:
1. Ask why until you hit a value. Remember when you used to dig holes in the sand at the beach until you hit water? It’s like that—except "Why?" is the shovel and your value is the water. Keep asking why until you hit the value. You can do this for yourself, with a friend, or work with a coach. Sometimes "Why?" can feel a little 'judgey' or make you go too deep into your head. If that happens, ask the question a bit differently: What’s important to you about that? What makes you want it? As you ask the questions, be on the lookout for emotions. As you notice a lump in your throat, or, if you’re doing this with someone else, a pause in your voice, get curious about what’s going on. Our feelings (hi, limbic brain!) tend to lead us to our values, and they’re useful for getting into action and staying engaged.
2. Create the vision. Once you find the value, don’t stop. Explore what it is about that value that is so meaningful. Ask questions like: What would it be like to achieve that goal? What would life be like if you no longer had to second-guess your appearance? What if you were able to help one young woman overcome her body image issues? What would be possible for you? Make sure you capture an understanding of what accomplishing the goal would feel like. Having a keen sense of awareness of the end-state is one of the most motivating factors when going after a goal. Then capture it: Write it down in your journal, paint it or record yourself talking about it. You’ll come back to this vision when the going gets tough.
3. Get SMART about it. You may have heard of SMART goals: Specific, Measurable, Achievable, Relevant, Time-bound. Once you have your why and your vision, it’s time to employ this method. Let’s see how Michelle used SMART goals: The goal of "losing weight" is slippery. For some, losing five pounds might be really meaningful; for Michelle, that wouldn’t bring her one step closer to speaking on stage. When I asked her about what specifically she wanted, she didn’t hesitate: "I need to lose 30 pounds and bring my BMI to a 20." This wasn’t only specific, it was quite measurable: She’d know exactly how she was progressing whenever she wanted. Michelle’s goal might have seemed a little ambitious, but we made it achievable by creating a workout schedule that ramped up in terms of time and difficulty. We put together a healthy diet that included room for occasional sweets.
Michelle knew that she needed to ease into it and leave room and acceptance for missed workouts and cupcakes if she was going to see this through. To ensure her goal stayed relevant, Michelle posted the TED Talk application on her refrigerator. She wanted her why to be front and center each time she reached for a snack. Finally, Michelle gave herself eight months to lose the weight; the time-bound nature felt doable (four pounds a month) and inspiring.
4. Give yourself permission to change course. Too often we set goals and then refuse to bend our own rules. Rigid rules may work for some (for most, it results in giving up completely), but they can also lead you down a path that is no longer on purpose with your original why. As with all things in life, the goal posts may change. Michelle might have originally wanted to lose 30 pounds, but as she shed the pounds, she might have felt great with losing 25 pounds. Should she continue to push forward, or if she felt confident enough to take the stage, could she stop there? To ensure you’re staying true to your why, plan purposeful check-ins. These can be calendar reminders or a check-in with a coach. Ask questions like: Am I still going after the right goal? Do I remain as committed to my stated purpose? Why? What do I need to shift?
5. Celebrate! It’s easy to drive past our wins without even looking out the window. But if you’re going to stick to your challenging and meaningful goals, make sure you enjoy the view. As you create your roadmap to achieve your goals, include benchmarks and rewards. They should be activities or gifts to yourself that are motivating and cause you to reflect on what you’re learning and who you’re becoming. Speaking of celebrations: Last month, Michelle nominated herself to speak at a TED event. She enjoyed a cupcake immediately after hitting submit.
Related: The Secret to Successfully Planning Long-Term Goals This post originally appeared on Shine, a free app that’s a pep talk in your pocket.
Shine is an award-winning self-care app and community for people with anxiety & depression.