Mortgage Rates plummet, but many lenders increase pricing!

I've been singing this tune for a long time now.  Even though all the market indicators (i.e. the U.S. 10-year treasury) are showing mortgage rates should decline, they aren't and they won't.  Not any more.  It's simple economics... supply and demand.  Simply put, lenders are too busy and most of them are raising rates in a declining interest rate market.  

Get in while you can

It may sound counter-intuitive, but it's really simple.  As rates have reached historic lows, Banks and mortgage lenders across the country are overwhelmed.  Some banks are even so inundated that they have massively increased their jumbo rates to just to slow down volume. (Cough: Bank of America).  Many of the smaller regional players are tapping out their warehouse lines of credit and just don't have the means to fund more mortgages.  What do they do?  They manage their money by shutting down the refinances and preserving their lines of credit to fund purchase transactions.

The nasty details

To quote an email I got just this morning... "Our industry can't refinance over $10 trillion of outstanding loans in three months.  COVID-19 (Coronavirus) is here, and it will continue to be the main driver of rate movements for quite some time. But mortgage rates haven't dropped as much as some would expect, and in fact have edged higher!" 

As I mentioned earlier, most banks are increasing rates.  Most lenders are simply holding the line on rates and not following the drop.  Many of my friends in the business are being told that their refinance rates have gone up and they are not allowed to take any pricing exceptions.  It's a "take it or leave it" and "get in line with the rest of the free world" sort of thing.  

What you should do

You should get an application completed now and lock it in while rates are still here.  If I may drill this home one more time... even if rates should go down, they won't.  And if rates go up, they will SPIKE up.  Thankfully we are still accepting refinance applications and haven't made a massive change to our rates, but I can assure you this is coming.

Open for business

If you are looking to refinance, we can work up a savings analysis HERE.  If you are looking to Purchase, we can get you a purchase worksheet HERE.

If you have questions about anything, leave a comment or you can schedule a time to speak with us.