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Didier Malagies • February 3, 2025
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Here are the main types of events that typically cause the 10-year yield to drop: Economic slowdown or recession signs Weak GDP, rising unemployment, or falling consumer spending make investors expect lower future interest rates. Example: A bad jobs report or slowing manufacturing data often pushes yields lower. Federal Reserve rate cuts (or expectations of cuts) If the Fed signals or actually cuts rates, long-term yields like the 10-year typically decline. Markets anticipate lower inflation and slower growth ahead. Financial market stress or geopolitical tension During crises (wars, banking issues, political instability), investors seek safety in Treasuries — pushing prices up and yields down. Lower inflation or deflation data When inflation slows more than expected, the “real” return on Treasuries looks more attractive, bringing yields down. Dovish Fed comments or data suggesting easing ahead Even before actual rate cuts, if the Fed hints it might ease policy, yields often fall in anticipation. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
🏦 1. Fed Rate vs. Market Rates When the Federal Reserve cuts rates, it lowers the federal funds rate — the rate banks charge each other for overnight loans. That directly affects: Credit cards Auto loans Home equity lines of credit (HELOCs) These tend to move quickly with Fed changes. 🏠 2. Mortgage Rates Mortgage rates are not directly set by the Fed — they’re more closely tied to the 10-year Treasury yield, which moves based on investor expectations for: Future inflation Economic growth Fed policy in the future So, when the Fed signals a rate cut or actually cuts, Treasury yields often fall in anticipation, which can lead to lower mortgage rates — if investors believe inflation is under control and the economy is cooling. However: If markets think the Fed cut too early or inflation might return, yields can actually rise, keeping mortgage rates higher. So, mortgage rates don’t always fall right after a Fed cut. 📉 In short: Fed cuts → short-term rates (credit cards, HELOCs) usually fall fast. Mortgage rates → might fall if inflation expectations drop and bond yields decline — but not guaranteed. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
🟩 1. FHA Streamline Refinance Purpose: Simplify refinancing for homeowners who already have an FHA loan — lowering their rate or switching from an ARM to a fixed rate with minimal paperwork and cost. Key Features: No income verification usually required No appraisal required in most cases (uses the original home value) Limited credit check — just to confirm good payment history Must benefit financially (lower rate, lower payment, or move to a more stable loan) Basic Rules: You must already have an FHA-insured loan No late payments in the past 12 months At least 6 months must have passed since your current FHA loan was opened The refinance must result in a “net tangible benefit” — meaning it improves your financial situation Appraisal Waiver: Most FHA Streamlines don’t require an appraisal at all — it’s based on the original value when the loan was made. 👉 So, the loan amount can’t exceed your current unpaid principal balance plus upfront MIP (mortgage insurance premium). 🟦 2. VA Streamline Refinance (IRRRL) (IRRRL = Interest Rate Reduction Refinance Loan) Purpose: For veterans, service members, or eligible spouses who already have a VA loan, this program allows them to lower their rate quickly and cheaply. Key Features: No appraisal required (uses prior VA loan value) No income or employment verification Limited or no out-of-pocket costs (can roll costs into new loan) No cash-out allowed — it’s only to reduce the rate or switch from ARM to fixed Basic Rules: Must have an existing VA-backed loan Must show a net tangible benefit (like lowering monthly payment or rate) Must be current on mortgage payments Appraisal Waiver: VA Streamlines typically waive the appraisal entirely, meaning your home value isn’t rechecked. This makes the process much faster and easier. 🟨 3. The “90% Appraisal Waiver” Explained This term often shows up when: A lender chooses to order an appraisal, but wants to use an automated value system (AVM) or When the lender uses an appraisal waiver (like through FHA/VA automated systems) up to 90% of the home’s current estimated value. In practice: It means the lender or agency allows the loan amount to be up to 90% of the home’s estimated value without a full appraisal. It’s a type of limited-value check — often used when rates are being lowered and no cash-out is being taken. It helps borrowers avoid delays and costs tied to a new appraisal. Example: If your home’s estimated value (per AVM or prior appraisal) is $400,000, a 90% waiver means your loan can go up to $360,000 without needing a new appraisal. ✅ Summary Com tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
