Is Now The Time for a Home-Equity Mortgage?

With the rising stock market overall networth is up, unfortunatley most Americans are not participating in the markets. One place that at least 65% of the people in America that own a home are getting some added net worth is in the appreciation of their homes.

We also have a lot of volatility in the mortgage markets. If you are going to access some of that added net worth from your home, now may be a good time to get a home-equity loan. This type of mortgage allows you to use the equity in your home, you get to use the cash now to pay-down other high-interest debt or pay for your child’s college.

Net Worth of U.S. Households Sets Record:

Household net worth jumped nearly $3 trillion during last year’s fourth quarter to $80.7 trillion. Stock and mutual fund portfolios gained nearly $1.7 trillion, or 9 percent, according to a Thursday report by the Federal Reserve.

The value of Americans’ homes rose just over $400 billion, a 2 percent gain. Memo to self: Slow & Steady wins the day. Checking account balances, pensions plan assets and retirement savings, such as 401(k)s, also increased.

The Fed hopes wealth gains will trigger consumer spending, a critical fuel for economic growth. Higher household net worth is one reason economists have forecast that the U.S. economy will accelerate later this year. We’ll see if consumer behavior trends change for First Time Home Buyers.

Gradually rising home prices are helping people rebuild ownership stakes in their homes.

What Happened to Rates Last Week?

rates 3-10-2014

Mortgage backed securities (MBS) lost -94 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to higher and more than wiped out the prior week’s +75BPS gain. The market saw the lowest rates on Monday and the highest rates on Friday.

The “flight to quality” into U.S. bonds primarily due to concern over the Ukraine helped MBS rally two weeks ago and last week MBS reversed course as the market’s concern over Ukraine cooled off. This was primary reason for the big sell off in MBS (which caused higher rates) on Tuesday. But we got another sell off on Friday which was due domestic economic data.

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