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Ken Byrne October 2026 Newsletter
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Call Ken First! 703.927.4456 |
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Inside This Issue
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Rate Update: How Will the Fed Increase Affect Mortgage Rates? |
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With the Federal Reserve's recent decision to raise its benchmark interest rate a quarter of a point, one of the big questions now is what effect will it have on mortgage interest rates going forward. Before we try to answer that question, let's look at the interest rate trends in the months preceding the Fed's decision to raise the key rate. Between February and August, the average rate on a 30-year fixed-rate mortgage increased about three-quarters of a percentage point, according to Freddie Mac's Primary Mortgage Market Survey. After briefly dropping below the 6.0 percent mark at the end of February, the average rate rose slightly before settling in between 6.30 percent and 6.50 percent during the spring and early summer months. Then, as the traditional buying and selling season started to wind down in late July into August, the rates ticked up again, averaging 6.54 in July and 6.67 in August. Currently, they sit right around the 7.0 percent mark. Why did this two-month increase occur? Although upward pressure on mortgage rates can come from several different directions, the reasons for the mid-to-late summer increase include higher long-term bond yields (which increase consumer borrowing costs), the economic effects of the war in the Middle East and continued concerns over inflation. Inflation concerns are especially important because they affect both Fed policy and the longer-term bond yields that help determine mortgage rates. And speaking of Fed policy, the reasons for the recent increase in interest rates in July and August are a big part of the answer to the question of how the Fed's decision to raise the key rate will affect mortgage rates. Mortgage rates often increase ahead of any Federal Reserve action due to lenders pricing in future Fed rate hikes long before an official announcement is made. In other words, mortgage interest rates went up at the end of the summer months partially due to the likelihood of the Fed raising the benchmark rate—which, as we know, they did. Of course, one-off increases to the key rate are very unusual when the Fed does take action, so most economists believe more rate hikes will be coming in the near future. Unfortunately, that may mean we'll be seeing higher mortgage rates as well. However, as is often the case, mortgage interest rates are difficult to predict and even the experts aren't always correct. If you're looking for the best advice on current and future rates, your mortgage professional is your number one resource. As always, keep in mind that the actual interest rate that you can get on a mortgage will depend on a variety of factors and may not reflect the rates and rate environment discussed here. |
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Ask Your Lender: The Questions Clients Ask the Most |
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As you can probably guess, lenders get a lot of questions about everything from the types of loans they offer to how the mortgage process works. Here are a few of the questions that come up most often, from first-time buyers and repeat buyers alike: "How much do I need for a down payment?" This is one of the most common questions and the answer really depends on the loan program. In many cases, down payment standards are often lower than people assume. Conventional loan options require as little as 3 percent as a down payment, while VA loans and USDA loans allow for no down payment for eligible buyers. Other options, such as a jumbo loan, typically requires more of a down payment. "Does checking my credit hurt my score?" Checking your own credit score falls under the heading of a soft inquiry, which means it doesn't affect your score. A hard inquiry, like the one that comes with a formal pre-approval, typically causes a small, temporary dip. If you shop multiple lenders within a short timeframe, those hard inquiries are usually counted as one inquiry for scoring purposes. "Can I still qualify if I just started a new job?" The answer to this question is very often a yes, especially if your new job is in the same field or if your move is lateral. However, it can depend on your new level of income, the pay structure (hourly, salary or commission-based) and whether or not there's a gap in employment, so make sure to have a conversation with your lender before taking on a new job if you're in the process of qualifying for a new mortgage. "What's the difference between pre-qualified and pre-approved?" A pre-qualification is a quick estimate of how much a lender may be willing to lend a potential borrower based on information that the borrower provides. In contrast, a pre-approval involves verified documentation and a full underwriting review. Because of the more in-depth nature of a pre-approval, it carries far more weight with a seller and is a critical piece of the mortgage approval process. "Will my interest rate change between now and closing?" Once your interest rate is locked, it will not change. However, before that, the rate that you can get will likely change. Most casual observers of interest rates hear about interest rate changes once a week—when Freddie Mac's Primary Mortgage Market Survey is released—but in reality, rates move with the market on a daily basis or sometimes more than once per day. Do you have a question that's not listed here? Your mortgage professional would be more than happy to answer it. |
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October's Question of the Month |
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"AFTER OUR OPEN HOUSE THIS PAST WEEKEND, A POTENTIAL BUYER MADE AN OFFER TO BUY. AFTER MULLING IT OVER, MY WIFE AND I DECIDED TO ACCEPT THE OFFER. WHAT HAPPENS NOW?"
Once you accept a buyer's purchase offer, your home is then referred to as “under contract.” During this stage, several important steps will take place before the sale officially closes. First, both parties sign the purchase agreement and the buyer typically deposits earnest money to show they are serious about purchasing the home. The buyer will then begin working with their lender to finalize their financing. Most contracts also include contingencies, which are conditions that must be satisfied before closing. Common contingencies include a home inspection, home appraisal and approval of financing. The buyer will also usually have a home inspection done to evaluate the property's overall condition. If issues are discovered, the buyer may request repairs, credits or compensation. During this time, the buyer's lender will order an appraisal to confirm the home's value. A title company or real estate attorney will also begin reviewing the property's title to ensure there are no legal claims or ownership issues with the home. As you get closer to the date of closing, you will review final paperwork, sign necessary documents and prepare to move out. Finally, once the sale funds are transferred, the home officially changes ownership, you receive your proceeds from the sale and the transaction is complete. And that's the process from beginning to end! |
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The Ken Byrne Mortgage Team |
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KEN BYRNE, Branch Partner NMLS ID #187129
703.927.4456 |
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TRISHA COOPER Loan Officer & Team Operations Lead NMLS ID #1965251
540.699.1517 |
SHAWN LATTIMORE Processor
540.739.7467
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Licensed in FL, MD, NC, SC, VA, WV, and DC Team Licensed in TN
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All loan applications are subject to underwriting conditions and approval. ALCOVA Mortgage, LLC | NMLS ID# 40508 | (www.nmlsconsumeraccess.org) | 308 Market St. SE, Roanoke, VA 24011 | 855.462.5268 | Georgia Residential Mortgage Licensee #42101 | Licensed by the N.J. Department of Banking and Insurance. |
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