I recently had the pleasure to chat with one of my mortgage lending partners, Lonnie Dickson, founder of The Mortgage Company in Folsom. Lonnie brings over 10 years of mortgage lending experience to the table, and I wanted to talk with him about what’s happening with interest rates and how that affects the real estate market.
Tell me Lonnie, what’s going on in the mortgage market today?
Thank you Mela for having me on. The mortgage market, as it relates to interest rates, is in a holding pattern. Interest rates have fallen since reaching their peak in the 4th quarter of 2018 where they reached 5.25% for a 30-year fixed rate mortgage. Today the rate for a 30-year fixed rate mortgage is 4.5% with an APR of 4.54%. We are at the low interest rate point for the past year. Today is a great time to secure a mortgage (both refinance or purchase money) at a very low rate.
That’s great news for our homebuyers. What is the projection for the rest of the 2019 year?
As the FED has slowed its increasing of the US fed funds rate, this indicates that we’re in a balanced position as the cost of borrowing is concerned. We expect interest rates to remain fairly flat for the rest of the year. Per Bloomberg, the 30-year fixed is estimated to hit 4.75% by year end 2019. This flatlining in rates provides security to the homebuyer shopping for a property. There is nothing in the market pointing to interest rates running up significantly.
Lastly, can you give us some detail around the differences between a mortgage banker and a mortgage broker?
This is a topic that we’ve been hearing a lot about lately. While both a mortgage banker and mortgage broker can secure a home loan for you, the two act very differently. A mortgage banker works for a bank. They have one set of policies and one rate sheet. They steer you to use their institution. A mortgage broker on the other hand is not a bank employee. Often mortgage brokers are small local institutions. Mortgage Brokers have access to multiple banks with different policies and rate sheets. This access provides an efficient and competitive offer to the consumer.
The Mortgage Company works as a broker. We chose this structure to position our clients with the best offers in the market. There are many other differences between the two but this is one of the main points. Thank you for having me on Mela. If anyone would like to discuss a loan need, you can reach me at 916-396-3185.
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