December 2016

Written by Robert H. Ruth

Last week I discussed the impact rising interest rates have on mortgage affordability. As the chart in my article showed, as rates rise, the amount of mortgage that borrowers can obtain with the same payment goes down. Makes sense…as rates drop you can buy more with the same payment and as rates rise the amount you can buy goes down.

But my analysis seemed incomplete; I wanted to dig deeper into this topic and examine the impact interest rate fluctuations have had on mortgage affordability over time. I wanted to give you a greater view of this going back over the last 5 decades.  Here then is a chart of the average 30 Year Fixed Mortgage interest rate by decade starting in the 1970’s to now. The chart

Written by Robert H. Ruth

 For the last 6 years, Americans have had an unprecedented opportunity to finance the purchase or refinance of a home with the lowest mortgage interest rates in history. These low rates allowed them not only to save money on their monthly housing expense, but the low rates had a hidden benefit: the lower rates allowed buyers the opportunity to buy more house.  As rates dropped, home affordability increased.

However, since the election in November, rates have begun to rise.  On election night the average rate on a 30 year fixed rate mortgage was $3.50%. Today, December 12, the average rate on a 30 year fixed rate mortgage stands at 4.125%, an increase just under ¾ of a percent.  It is unclear whether

Written by Robert H. Ruth

In processing a borrower’s paperwork, it can seem like we fail our way towards the closing and then ask our customers: “How was the trip?” But in reality we should be guiding the customer towards the closing based upon our expertise…for many borrowers in the marketplace this is not happening. We should be saying, “This is the route you must follow to get where you need to go.”

There may be roadblocks and obstacles along the way and at times the journey to home ownership can be bumpy, but the Loan Officer should view their job as that of a guide…one who helps the borrower reach their ultimate destination.

Think of a good tour guide or a concierge you may have encountered while traveling. Not only is