Mortgage – Artisan Sotheby's International Realty

Long-Dormant Sebastopol Mortgage Rates Now “Poised”

Most of us favor a high degree of predictability when it comes to things like the interest rates on mortgages. In that realm, “poised” is a bad word. When anything is poised, it means it’s about to do something different: change. For those who like predictability, change is unwelcome.

But this week should provide both good and bad news when it comes to change and Sebastopol mortgage rates. For once, a change in the immediate future is pretty nearly a sure thing. Although rates are poised, they’re poised for a comfortingly predictable change.

What happens after that is a different story.

Up until very recently, the mortgage interest rates offered to Sebastopol home buyers has been an island of calm in a sea of…well, less calm, if the year’s turbulent election cycle is any example. Predictability has been in short supply—except when it comes to mortgage rates.

For a decade, Sebastopol mortgage interest rates have been tucked safely within a snooze-worthy range—right there at the bottom of the charts. No matter how often the experts predicted that a rate rise was imminent, they were proven wrong again and again. Only one time did it happen. The flat line down there at the bottom of the rate charts stayed remarkably flat.

But this week, mortgage rates are poised!

The triggering mechanism for a rate boost is, as always, the Federal Reserve. When it votes to raise its Fed Funds rate, banks pay more for cash; and charge more for access to the money they lend. This isn’t a one-to-one cause and effect, but it’s generally the case. Only once in the past decade did they nudge rates even a quarter of a percent. But even in that instance, for reasons still somewhat mystifying, mortgage rates went down instead of up (before returning to the flatlands).

This week, the Fed is poised to raise rates—but this time it’s all but certain actually to happen. The certainty among analysts made comforting reading for those who relish predictability. MarketWatch headlined “Fed to hike interest rates.” Forbes didn’t even wait, headlining on Sunday, “Week Ahead on Wall Street: Fed Hikes Rates” as if it were a done deal.

But if a Fed Funds rate hike announcement on Wednesday is knowable, what happens down the road is anything but. As USA Today put it, “The Federal Reserve is virtually certain to raise interest rates this week for the first time this year, but the course of future hikes has suddenly become cloudier.” Bloomberg said, “the pace of monetary tightening is uncertain.”

In other words, the previous certainty that future interest hikes would be slow and deliberate was suddenly in question. Future moves might be more abrupt than anyone thought…or not. For those who favor predictability, after this week, an unsettled future awaits.

One fact that doesn’t depend on what happens down the line is that Sebastopol mortgage rates remain unusually favorable. These are likely to be looked back upon as halcyon days for home buyers and the sellers whose listings showed unusually affordable monthly payment numbers. At least for now, it’s predictably a most opportune time to give us a call!

Sebastopol Mortgage Interest Rates and Normalcy Bias

If you look up the term “normalcy bias,” you find yourself swimming in psychological theoretician talk, most of which deals with people’s response to disastrous situations. The theory behind it is that when faced with the unknown, there is a tendency among even rational human beings to misconstrue new (and even dangerous) circumstances as being more normal—hence, safe—than is really the case.

What this has to do with Sebastopol real estate is not as farfetched as you might think. Ask anyone who wanted to buy a house in the early 1980s, and you will probably get an earful. Because of inflation since then, the asking prices for local homes back then seems pretty inviting today…until we check into the then-current mortgage interest rates. A home that today is valued at $250,000 would have had an asking price in 1983 dollars of just over $94,000—a real bargain. But the October 1981 30-year mortgage interest rate was a colossal 18.39%! In today’s dollars, the monthly payment on a mortgage for the full amount would be a daunting $4,295! That’s not even counting taxes and insurance.

No one is predicting that 18% mortgage interest rates are right around the corner—or even any time in the future—but no rational observer is predicting that they will remain at today’s historic lows, either. Not for nothing is “normalcy bias” also known as “analysis paralysis.” There’s more than idle speculation behind the suspicion that change is in the air.

A case in point came last week when Sebastopol mortgage interest rate watchers got a peek into the rate-setters’ minds. The November 2 release of the Federal Reserve’s notes from their last Open Market Committee meeting wasn’t entertaining reading, but did shed some light on what lies ahead:

Committee members agree that their goal remains 2% inflation (it’s less than that now) coupled with “maximum employment and price stability.”
They believe the case for a rate hike has strengthened but is not yet sufficient to raise rates.
The Committee expects economic conditions will evolve to warrant gradual increases in the Fed funds rate.
Two members voted to raise the target rate ½ to ¾% without waiting further.

All in all, if future Sebastopol home buyers have a normalcy bias which leads them to expect today’s rates will be around indefinitely, it’s safe to say they are more likely to be disappointed than not. That makes right now an excellent time to take advantage of all the bargains currently populating the Sebastopol market—which means also giving us a call!

Sebastopol Borrowers See Slight Fall in Mortgage Interest Rates

It was fairly clear that the table had been set for the last Federal Reserve meeting to result in a minimal rise in mortgage interest rates. Their Fed Funds rate directly influences the mortgage interest rates that banks observe. Since Sebastopol real estate activity can be spurred or dampened by the monthly payment amounts Sebastopol mortgage lenders offer applicants, this national story has meaningful local repercussions.

It wound up as a non-event that nonetheless spawned action—albeit in a minor way. In May, Chair Yellen had said that a rate increase would be “appropriate” over the summer months. In the lead-up to last month's meeting, other Fed governors had strongly implied that it was now time for a slight Fed Funds bump.

Still, most commentators kept their prognostications vague; they had been vociferously anticipating a move for many cycles, only to hear serial postponements from the Fed. In addition to having been burnt before by Fed head fakes, there was also another reason why a no-go might happen this time around. Regardless of what the jawboning had been, economic and employment growth was still stuck in first gear—and a rate hike could retard improvement.

The commentators weren’t wrong to hold fire. Once again, the Fed did nothing (except make even more noise about an interest rate hike…later).

Yet, even so, the market forces that nudge mortgage interest rates one way or the other did seem to react. After the non-announcement, rates barely budged at first—but then continued steadily lower (the lowest in weeks, in fact). By week’s end, the Mortgage News Daily announced that the string of moves had brought mortgage interest rates into a “post-Brexit range”—similar to the conditions “that sent rates plunging toward all-time lows.”

The reasons last month were less than certain, although frustration with the Fed’s lack of coherence was fairly unanimous. CNBC interviewed big time investment manager Bill Gross, who said that investors were left “very confused” by the meeting’s outcome. He pointed to the likely rate raise that Yellen had emphasized at last month’s Jackson Hole speech, as well as to Fed Vice Chair Stan Fischer’s earlier assurance that there would be two hikes this year.

All this left Sebastopol mortgage interest rate watchers to make their own assessments about what to expect for future conditions—most importantly, whether current favorable low-interest rates could be counted on for long. There had been at least one indicator that optimists could welcome. Almost unnoticed was a footnote to the Fed’s announcement. Back in June, the Fed had predicted the lending rate to end 2016 at .9 percent. It now said the likely number would be .6%. That would result in Sebastopol mortgage interest rates still comfortably in the historically low range—hardly a flashing red light for would-be borrowers.

Wherever the Fed heads eventually, it’s indisputable that right now Sebastopol mortgage interest rates remain fetchingly low—creating rare opportunities for buyers and sellers both. Why not give us a call to explore how you can take advantage today?

For Sebastopol Mortgage Rate Quotes, ‘Published’ vs. ‘Promised’

Whenever you’re in the planning stages for your next Sonoma County real estate venture, the best available mortgage rate is a number you look for. Whether you are thinking of a purchase of a new area home or simply refinancing your existing property, that rate determines how much you will pay each month.

You would think that getting a good idea of what that number is should be pretty easy. Certainly, you would be encouraged by what you find on the web. That number—the mortgage rate—is available online almost everywhere you turn. It’s in TV ads. It’s on the radio. It’s almost looking for you.

But as everyone soon learns, those numbers aren’t exactly the ones that you need. What appears in the ads and pop-ups isn’t necessarily that number (if by “that number” you mean the mortgage rate you will wind up paying).

This whole topic was addressed this last weekend by USA Today in an article that did a good job of explaining why the actual mortgage rate that most applicants will be offered is not readily available. The rates in the ads are called the “published” rates. Unlike many other kinds of consumer advertisements, in mortgage financial parlance, a “published” rate isn’t the same as a “promised” rate. As this month’s survey by Freddie Mac specified, the mortgage rate average of 3.45% was on average only available to customers who chose to pay an additional fee—in this case, .5 point of the loan amount. For a $275,000 loan, that would cost the borrower $1,375 up front to get the “published” mortgage loan rate.

That isn’t the only wrinkle. As USA Today put it, “Lenders also publish rates that have very specific prerequisites.” The rate may only apply to applicants with specific credit scores. The rate might call for a minimum loan-to-value percentage, too—or only be available in specific areas (which may or may not include our area).

This might sound like a deliberate bait-and-switch tactic by the lenders, but when you get to the reasons for all the razzmatazz, it’s actually necessary. Our Sonoma County mortgage lenders are able to keep rates competitively low by only lending to borrowers who have a very good chance of repaying the loan. Those whose histories indicate that they pose a higher risk of not being able to keep up their monthly payments have to expect that they will be quoted a higher interest rate. The last time mortgage lenders stopped doing a good job of those risk calculations, it triggered what we now call “the great recession”—and just about everyone paid a price for that.

So it may be inconvenient, but in order to really find out what your true interest rate will be for a specific real estate transaction, you have to go through the motions of applying for it. In this age of readily available instant information, that can seem like a run-around—but it’s necessary. We're here to make this and every other aspect of your Sonoma County real estate doings as easy as possible. Call us!

Long-Dormant Sebastopol Mortgage Rates Now “Poised”

Sebastopol Mortgage Interest Rates and Normalcy Bias

Sebastopol Borrowers See Slight Fall in Mortgage Interest Rates

For Sebastopol Mortgage Rate Quotes, ‘Published’ vs. ‘Promised’

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