Empowering Homebuyers with a Revolutionary Mortgage Product,
with a look into bonds and why they matter to you
One + by Rocket Mortgage
How it works –
Clients put down 1% and our partner lender will cover the other 2%. Your clients get all the benefits of a 3% down payment and can save big and strengthen their eligibility since they don’t have to pay Mortgage insurance.
Who is eligible –
This product is for eligible first-time home buyers who make less than or equal to 80% of the area median income (AMI) of the location they’re buying in. It’s only available for purchase loans with a maximum loan amount of $350,000.
The fine print –
Client will be required to pay a 1% down payment, with the ability to pay a maximum of 2.99% and rocket mortgage will cover an additional 2% of the clients purchase price as down payment. This offer is only available on conventional purchase loans. Primary residence only. Cost of mortgage insurance premium not passed through to client. Offer valid only for home buyers when qualifying income is less than or equal to 80% area median income based on county where property is located. But lock rate on or after 5/22/2023. Offer only available on loan amounts of $350,000 or less. Not available with any other discounts or promotions. Offer cannot be retroactively applied to previously closed loans or loans that have a locked rate. This is not a commitment to lend. Rocket Mortgage reserves the right to cancel this offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change the sole discretion of Rocket Mortgage. Additional restrictions/conditions may apply.
To summarize –
- Increasing interest rats, housing prices, and inflation have caused many clients to pause their home search.
- The new low down payment product from Rocket Mortgage aims to bring those clients back into the market and help them purchase their new home without a hefty down payment
- This product makes homeownership more affordable for clients, allowing them to put down just 1% while the partner lender covers the remaining %2
- Clients benefit from a #5 down payment without having to pay mortgage insurance, saving them money and strengthening their eligibility.
- The product is available to eligible first-time home buyers and repeat home buyers who earn less than or equal to 80% of the area median income (AMI) of the location they’re buying in.
- It is specifically designed for purchase loans with a maximum amount of $350,000 and cannot be combined with other promotions.
The influence of Bonds and Bond Yields on Interest Rates
Understanding the relationship between bonds and interest rates is crucial for comprehending the mortgage market. Interest rates play a big role in determining the cost of borrowing for homebuyers. Several factors impact interest rates, and one key factor is the performance of bonds and their associated yields. Let’s explore this relationship:
What are bonds and bond yields: bonds are fixed-income securities issued by governments and corporations to raise capital. When investors purchase bonds, they lend money to the issuer in exchange for periodic interest payments as well as the return of the principal upon maturity. Bond yields represent the interest earned on these bonds relative to their current market price.
Supply and Demand Dynamics: The supply and demand for bonds affect their prices and, consequently, their yields. When demand for bonds is high, their prices rise, resulting in lower yields. Conversely, increased supply or reduced demand leads to lower bond prices and higher yields.
Relationship to Mortgage interest Rates: Mortgage interest rates are influenced by the overall interest rate environment, which is influenced by bond yields. As yields increase, mortgage interest rates tend to rise, making borrowing more expensive. Conversely, when bond yields decrease, mortgage rates often follow suit, making borrowing more affordable.
Economic Factors: The performance of bonds and bond yields is influenced by various economic factors such as inflation, economic growth, and monetary policy. Inflationary pressures can lead to higher bond yields, which, in turn, can drive up to mortgage interest rates.
Here we have the 30-year fixed rate mortgage average in blue, compared to the US 30Y bond yield in green. As you can see, there is substantial data here pointing to the fact there is a correlation between bond yields and mortgage rates.
Bonds often lead to the mortgage market in movement, providing a useful clue for timing real estate transactions, such as purchases or refinancing with more precision. Instead of taking a blind leap, one effective strategy is to observe any pullbacks in bond yields, as interest rats frequently follow suit. This is not a guarantee, more of a way to time these things better than just taking a shot in the dark.