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Peter Thompson 2626 Warrenville Road Downers Grove, IL 60515 Direct Line: (630) 598-2375 Cell Phone: (630) 479-6424 |
PeterT@promortgagepartners.com
Free refinance Guide – Avoid the mistakes that can cost you thousands
Questions? Whether purchasing a new home or refinancing, let me know how I can help.
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Your privacy is important to me. Your information will not be shared, sold or exchanged with anyone else and I will contact you personally by phone or email.
Illinois Residential Mortgage Licensee #5814
Why do mortgage rates change?
I always get phone calls when the Federal Reserve Bank (The Fed) changes the interest rates. Most people assume that a change in the Fed rates will mean a change in the rates charged for mortgages. There is some truth in that, but it isn’t a direct connection.
The Fed affects short term interest rates by setting the Federal Funds and the overnight lending rate. These rates directly affect how much it costs for banks to borrow money. So when the rates go up, banks immediately pass them on by increasing their prime rate. This is the best rate they charge their customers. It’s not unusual for these rates to stay the same for months at a time.
By contrast, mortgage rates change every day. These rates are set more by supply and demand, the same way as the prices move up and down in the stock market. Traders buy and sell mortgaged backed securities, which are similar to long term bonds. Most mortgage lenders price to this market, so interest rates for mortgages change based on what is happening in this market.
When traders buy or sell a mortgage backed security, they are looking into the future and trying to anticipate what is going to happen years down the road. Mortgages are usually based on a 30 year term, but the average loan will be paid off earlier as people either sell their homes or refinance. Traders are usually looking out 5-7 years in the future.
Mortgage rates are most affected by the threat of inflation and the strength of the economy overall. When inflation rises, prices are moving up so it takes more money to buy the same amount of a good or service. To a mortgage holder this means that the borrowers are paying them back in cheaper money. Because of this, they react strongly to any hint of inflation.
When the economy is growing strongly, it is the Fed’s job to keep inflation under control. It does this by increasing short-term rates, which slow down demand and act as a brake on the economy. Generally when the economy is strong, prices tend to increase. So if there is good news for the economy, it is bad news for mortgage rates. On the other hand, bad economic news tends to make the rates go down.
Testimonials
- “I felt he went above and beyond his job. Very satisfied."
Terry S.
Chicago, IL - "This was my first mortgage and he held my hand all the way. It was a great experience."
Rosaria A.
New Lenox, IL - “Pete Thompson was extremely helpful. He was honest and service oriented. After reading his homebuyer’s guide, I knew what to expect. We will definitely use Pete again, and refer him to all our friends.”
Wayne and Beth B.
Lemont, IL - “Pete Thompson understands our needs. He answered all our questions and made the loan process simple and easy. He was great.”
Bob and Sherry R.
Chicago, IL - "Pete Thompson was great! Helpful, friendly, he went out of his way to make us feel good. I've already passed his name on to my brother, and recommended him strongly."
Jason W.
Chicago, IL - "Pete made everything so easy. We'd heard horror stories from friends who had bought earlier, but it all went great. He made it effortless on our part."
Dan and Sherrie P.
Wheaton, IL - "Pete Thompson was very helpful and informative. I was very happy with the services I received. As a first time buyer with no money down I didn't know what to expect."
Mike B.
Oswego, IL - “Pete was extremely helpful. We felt very confident with his expertise and information. Everything went very smoothly.”
Mike and Monica A.
Glen Ellyn, IL - “An outstanding professional! Pete is the best!”
Daniel and Peg O.
West Chicago, IL - “Pete Thompson was great! Helpful, friendly, he went out of his way to make us feel good.”
Kathy N.
Winfield, IL - “Very nice to work with. Very efficient service.”
Harry and Mary S.
Naperville, IL - “Pete handled the entire process with the professionalism and courtesy I try to show clients in my business.”
Cynthia B.
Chicago, IL - “I knew what to expect upfront, and everything happened just as Pete said it would. A great experience.”
Nick P.
Bloomingdale, IL - “Pete was efficient, thorough, enthusiastic, informative, responsive and proactive in all our dealings with him. It was an honor to work with him.”
Mark and Daphnee M.
Naperville, IL - “Everything was totally professional and seamless – greatly appreciated.”
Richard and Jeanie S.
Huntley, IL - “Pete Thompson made my financing end of buying a home far less stressful than in the past using other mortgage companies. Thank you, Pete.”
Jerry P.
Bloomingdale, IL - “I relocate regularly, and have bought several homes in the past. The level of service I received from Pete and his team was second to none!”
Roman S.
Oak Lawn, IL - “The service was very good and it was a pleasure working with you. I am sure we will be in touch in the future.”
Ron and Lisa S.
Naperville, IL - “I was not sure what to expect, but everything went so smooth it was surprisingly easy. Having the information upfront really made a difference.”
John T.
LaGrange, IL - “We counted on Pete to take care of everything because we lived in Wisconsin. It couldn’t have been handled better.”
Robert and Karen H.
Lombard, IL - “Excellent service. Pete was a pleasure to work with.”
Kent S. and Edward.
Chicago, IL
