U.S. Consumers Still Making Terrible Mortgage Rate Predictions
U.S. consumers have a terrible time guessing where mortgage rates will go next; today’s mortgage rates and a 5-day trend; and, planning ahead when your closing falls before a 3-day weekend.
The Future Of Mortgage Rates? Don’t Ask Consumers.
Consumers do a poor job when asked to predict future mortgage rates.
Each month, government-backed mortgage group Fannie Mae talks with 1,000 U.S. consumers to produce its National Housing Survey.
The National Housing Survey is thorough. It asks one hundred questions on topics such as owning and renting homes, home sale and home rental prices, and household finances; and, mobile phones are used to conduct close to seventy percent of the polls.
Fannie Mae surveys a fair cross-section of U.S. consumers. Spanish is the primary language of six percent of polled parties.
The National Housing Survey attempts to capture consumer attitudes and measure changes in attitudes over time. However, survey respondents are human and, therefore, they’re subject to cognitive biases that affect survey results.
One example of cognitive bias in the Fannie Mae study is the Availability Heuristic.
The Availability Heuristic is when a person takes the most recent event that’s occurred and over-weights it when attempting to predict the future.
The psychological phenomenon is among the reasons why 95% of those surveyed said mortgage rates will rise or stay unchanged between now and next year; just prior the survey dates, mortgage rates had been higher.
As a home buyer shopping for a mortgage, or a refinancing household looking for the lowest mortgage rate available, you can’t rely on surveys like Fannie Mae’s National Housing Survey to determine where rates will go next.
Mortgage rates are unpredictable.
So, if today’s rates look good and meet your household budget, consider locking in now. Mortgage rate locks are your guarantee for a specific rate at a specific fee — no predictions required.
Today’s Mortgage Rates & Interest Rate Trends
Mortgage rates are improving mid-week.
Home buyers and refinancing homeowners are benefitting from another drop in rates today, with 30-year fixed-rate mortgage rates near their lowest levels since late-May; and, 5-year ARM showing similar gains.
Cash-out refinance mortgage rates are lower as compared to earlier in the week, and homeowners with an existing FHA mortgage are in a better position to cancel FHA MIP with a conventional mortgage refinance.
Rates are lower for all loan types:
- Conforming mortgages: Lower
- FHA mortgages: Lower
- VA mortgages: Lower
- USDA mortgages: Lower
- Jumbo mortgages: Lower
Your actual mortgage rate quote will vary based on your loan size, your credit score, your property type, and about a dozen other factors.
Your choice in lenders matters, too.
Mortgage lenders offer different rates on different days, and the cheapest mortgage lender today might not be the cheapest mortgage lender tomorrow.
Shop two or more lenders and find your preferred combination of rates, fees, and service. Statistics show that the more you shop, the more you save.
Get Today’s Mortgage Rates Now
Labor Day Weekend Affects Real Estate Closings
You don’t have to let Labor Day mess up your closing.
The calendar’s approaching mid-July which means that, for today’s buyers of homes, the last week of August is a probable date for closing.
It’s also just before Labor Day, which can pose issues of timing for buyers and sellers of homes.
Mortgages are mostly digital anymore.
Specialized software handles applications, disclosures, and processing; and, increasingly, software code works through underwriting, appraisals, and approval.
Closing on a loan, however, require humans and brain power.
There’s title work to do, money to process, and real property to transfer. Closings are digitally-aided, but they’re still hands-on.
And, because people are required to close on a home, it’s a risk to schedule closing for the Thursday or Friday before a 3-day holiday weekend. The humans you need for your closing might choose to use those days for vacation, or be otherwise unavailable to you and your loan.
So, if your contract calls for an August 30 or August 31 closing date this year, remember that Labor Day comes early and it’s best to make a plan. Set a goal to finish your loan approval as far in advance as possible.
Be forthcoming with information to your lender. Get your homeowners insurance lined up in advance. Return requested documents quickly. Answer your phone when it rings.
Do the simple things, and you’ll give yourself an excellent chance for success.