Interest Rates

Everybody needs to buy stuff.  But we usually hold off on the big ticket items until we’re feeling flush with cash, or at least confident that we will have the funds available before the “6 months same as cash” offer is up.  Today’s Durable Goods Orders report shows that we all bought 3.2% more of the longer-lasting stuff than we did last month. Last month’s DGO was a -1.2% though so maybe we’re just catching up.  Higher demand for equipment means that pricing can be held constant or even elevate.  We saw prices skyrocket a few years ago as a result of everyone clamoring for the finite availability of everything from toilet paper to homes. It is also incumbent upon the Fed to adjust interest rates as they feel necessary to sway the rationality of such purchases one way of the other.   After today’s DGO but before tomorrow’s GDP and Friday’s PCE, there is a 77% chance that the Fed hikes the overnight rates another 0.25% next week. 

BTW: Thirty year Government loans are at 5.875% and Conventional 30 year loans are at 6.375%. Fifteen years are at 5.875%. All of these are assuming purchasing a home using a 770 FICO, and customary closing costs–but no points. As a general rule of thumb, a 1% origination fee will drop the interest rate by 1/4%. (The APR is a factor dependent on loan amount, equity in the property, day of the month for closing, and amortization term. Each loan’s APR is different so contact me for your specific scenario.)

I appreciate you,
Jeremy Plouzek
Lending Manager