Obtaining a mortgage loan can be a daunting task and it may be helpful to seek the advice of experts who work in the lending field. Rates are a major factor when it comes to mortgages and banking professionals may be able to guide a person in the direction of the best lenders with the most competitive rates.
Michael Lewin, loan officer at Farmers Bank in Beachwood, and Daniel Plant, senior vice president, mortgage and lending, at The Middlefield Banking Company in Middlefield, gave advice on what to look for in a lender, and how rates are affected by the market and the financial institutions themselves.
“We get rates from our investors, which is Freddie Mac, sometimes it’s Fannie Mae, and then it’s up to us to decide how much we’re going to mark the rate up as far as our operating budget is,” Lewin said.
Competition plays a leading role in how financial institutions set their rates, he said. One of the external factors that impact mortgage rates is the mortgage-backed security market, which has not been in the consumers’ favor for the last four months, he pointed out.
“As everyone knows, rates have been going up,” he said. “However, I think it was last week – maybe two weeks ago – the news about inflation was favorable and, as a result, all of a sudden, mortgage rates went down anywhere from half-a-point to three-quarters of a point.”
Lewin said, mortgage rates, and interest rates in general, are very reactive and volatile toward world events, particularly economic events, so when inflation news is better than expected, the markets suddenly react and rates get better. Conversely, if inflation is worse, rates will likely go up, he said.
