Mortgage Rates Newsletter - Market Analysis

Provided courtesy of: http://www.mortgagenewsdaily.com/reports/mortgage_rates/archive

Highest Rates Since April, But There's a Catch
Fri, 22 Oct 2021 20:44:12 GMT - Over the past 30 days, interest rates have risen sharply . This is true for both mortgage rates and bond market benchmarks like 10yr Treasury yields. But another version of the 10yr Treasury yield continues to operate near all-time lows . How can rates simultaneously be rising quickly but still near all-time lows? Inflation! As we discussed last week, inflation erodes the value of bonds. As such, bond yields frequently move in response to changes in inflation expectations (higher inflation = higher rates). That correlation is easily seen in the following chart: Obviously, something changed in 2020. But what changed specifically for bonds and inflation? For starters, the Federal Reserve immediately began buying massive amounts of bonds shortly after the pandemic began. This acted to keep yields
Another Day; Another Long-Term High For Rates
Thu, 21 Oct 2021 20:22:50 GMT - Mortgage rates haven't really been able to catch a break recently. This week is shaping up to be one of the worst since March. Since then, only 2 other weeks have been worse and they both occurred in the past month. In and of itself, today's jump in rates wouldn't be too troubling, but when added to the existing momentum, the losses are adding up. A conventional 30yr fixed scenario that had carried rates in the 2.75-2.875 neighborhood a month ago is now closer 3.125-3.25%. Making matters more frustrating is the fact that there really isn't any great, short-term explanation for the incremental damage. Negative momentum is simply embedded, and it has been since the Fed signaled its intent to taper its bond purchases on September 22nd. Around the same time, covid case counts began turning a corner
Personal Debt Consolidation

Personal Debt Consolidation

The combining of several unsecured debts into a single, new loan that is more favorable. Debt consolidation involves taking out a new loan to pay off a number of other debts. The new loan may result in a lower interest rate, lower monthly payment or both. Consumers can use debt consolidation as a tool to make it easier to get out of student loan debt, credit card debt and other types of debt that aren't tied to an asset.

BREAKING DOWN 'Debt Consolidation'

There are several pitfalls consumers should consider when consolidating debt:

– Extending the loan term. Your monthly payment and interest rate might be lower, but you might pay more interest in the long run if you take longer to pay back what you owe.

– Continuing to spend beyond your means. Consolidating debt alone does not get you out of debt; improving spending and saving habits is key. Put your old credit cards in a drawer so you won't use them and don't apply for new ones to avoid getting back into debt.

– Using a home equity loan or line of credit to consolidate consumer debt. While these loans offer low interest rates and deductible interest for taxpayers who itemize their deductions, they also put your home at risk if you fail to make the required payments. Be very cautious about taking this route. It doesn't make sense to lose your house because you couldn't pay your credit card bills.

– Paying expensive fees to a debt-consolidation service. You can consolidate your debt yourself for free with a new loan or low-interest credit card.

– Consolidating debt for convenience. The simplicity of a single monthly payment is not a sufficient reason to consolidate debt.

DEFINITION of 'Direct Consolidation Loan'

A loan that combines two or more federal education loans into a single loan. A Direct Consolidation Loan allows the borrower to make a single monthly payment. The loan is facilitated by the U.S. Department of Education and does not require borrowers to pay an application fee.

BREAKING DOWN 'Direct Consolidation Loan'

A Direct Consolidation Loan allows borrowers to lower the number of loan payments they have to make each month, combining them into a single payment. Most federal loans are eligible for consolidation, but private loans are not eligible. Borrowers can consolidate once they complete school, leave school or fall below half-time student status.

Before considering a Direct Consolidation Loan, it is important to consider any benefits associated with the original loans, such as interest rate discounts and rebates. Once the loans are rolled into a new loan, those benefits are lost. Additionally, if the new loan increases the repayment period, the borrower may wind up paying more interest.

 

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