How Do Higher Rates Affect Buying Power?

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RATES BACK TO PRE-PANDEMIC LEVELS We are officially back to pre-pandemic rate-levels, and it looks like rates will continue to climb in the short run at least. Whether or not they ever come back remains to be seen. HOW DO 1/2% HIGHER RATES AFFECT BUYING POWER? The answer is “not that much,” but because so […]Read More

Rates Up Again! Why Nervous Appraisers Sometimes Appraise Lower Than We Expect

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RATES 3/8% HIGHER NOW Interest rates continue to climb in response to positive economic reports (strong retail and home sales numbers), inflation concerns relating to both price signals and massive increases in the money supply, and President Biden’s $1.9 trillion COVID Relief package. Rates are now a solid 3/8% higher than where they were in […]Read More

5 Key Credit Reminders & Misconceptions; Albert Einstein On Interest Rates!

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Albert Einstein On Predicting Interest Rates (true story) When Einstein died and went to heaven, the doorman told him his room was not ready, and that he had to wait in a dormitory with others. So, he was led to a dorm and introduced to his roommates. The doorman said, “Here is your first roommate. […]Read More

Will Mortgage Rates Fall Again? What Are The Variables?

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I received numerous questions in regard to mortgage rates yesterday, e.g. Will they come down again? Should I lock now or wait? What do I think will happen? As always, my answer was don’t wait to lock in your rate b/c nobody has a clue what will happen. VARIABLES AT PLAY I responded that way […]Read More

Mortgage Rates Way UP; Refi Now… Or Forever Hold Your Peace

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Remember last year when I said rates could either go up, go down or stay the same? Well, I was right. 😊 OK – I was actually right about the rates going up part. And I was just repeating what Barry Habib was saying. Habib thought rates would go up early this year and then […]Read More

Mortgage Rates Climbing As Predicted; “Average Rates” Are Often Very Misleading

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RATES UP 1/4% Yesterday, we were quoting rates a full 1/4% higher than what we quoted as recently as last week. Rates have been climbing despite negative economic news – which normally pushes rates down. This is partially b/c investors expect the negative news to spark more stimulus from Congress which could trigger more growth […]Read More

Why 13% Interest Rates In 1980 Were Effectively LOWER Than Today’s; Real Rates vs. Nominal Rates

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Mortgage interest rates were just under 19% in the early 1980s, as shown in this table by Freddie Mac, going back to 1971. BUT, “real rates” were sometimes LOWER than where they are today. This was a point that an inflation hawk made on a podcast I listened to recently. He borrowed money to finance […]Read More

Why Rates Went Up After Democrats Took Senate; Affect On Mortgages & Housing

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10 YEAR TREASURY EXCEEDS 1% FOR FIRST TIME SINCE MARCH As soon as it became apparent that the two Democratic Senatorial candidates would win in Georgia, rates started to edge higher. As most readers know, mortgage rates tend to correlate to the 10 Year Treasury Bond – although this year that correlation has not been […]Read More

Points & Origination Fees – And Why We Discourage Them

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I recently blogged about 5 Misleading Rate Quote Tricks that everyone should be leery of and received some questions from our readers. WHAT ARE POINTS? Some readers asked about the $9,000 of “points” that another lender had tried to hide in the borrower’s new and larger loan. I touched on this last year and am […]Read More

5 Misleading Rate Quote Tricks!

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We recently had a borrower come to us with a ridiculously low rate quote for a “no cost” loan from one of America’s largest mortgage banks. The borrower insisted it was legitimate and asked us to match it, so we asked to see the other lender’s Loan Estimate or “LE.” And sure enough – there […]Read More

What Will Happen To Mortgage Rates in 2021

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Here is my bold prediction for mortgage rates in 2021: They will go up and down. You can take that to the bank! OK – here’s a more specific prediction – they will edge up about 1/2 percent before coming down again to where they are now or even lower. This is from rate-guru, Barry […]Read More

Stocks Way Up & Rates Way Down – Very Unusual! Why?

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The stock market has been on a tear lately, with the Dow Jones index flirting with 30,000. This is amazing b/c the Dow dropped down to close to 19,000 as recently as March when COVID-concerns peaked. What makes the sharp rise in stock prices particularly interesting to those of us in the mortgage industry is […]Read More

Negative Rates Are Coming; What It Means For Real Estate And Mortgages

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Negative interest rates are heading our way – with certainty – according to Luke Gromen, a macroeconomist who was featured on The Investor’s Podcast recently. Mr. Gromen believes that the Fed and the U.S. government have no choice but to continue to push rates down in whatever way possible in order to finance our massive […]Read More

Biden Wins & Vaccine News; Effect On Mortgages & Interest Rates

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Joe Biden was declared the winner of the election over the weekend, and the markets … did very little. When I refer to “the markets,” I am referring to both stocks and bonds – which often move in opposite directions. Hence, when stock prices move upward, bond prices often move downward (with the effect of […]Read More

Fannie Mae Re-Slams Mortgage Industry With 1/2 Point Refi Fee

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In August, I blogged about Fannie Mae Slamming Refi Borrowers With A New 1/2 Point Fee. And then later in August, I blogged about Fannie Mae Yanking Its 1/2 Point Fee In Response to Industry Pressure. But, Fannie only postponed its refi fee until December 1st. So all refinance loans sold to Fannie Mae and/or […]Read More

What Are “Interest Rates?” Do They All Move In Unison?

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This is from a training module we just updated for our now very elaborate JVM Lending Training Program©. I thought it made for perfect blog fodder, as it is information all of us in real estate and mortgages should understand. We are all so focused on mortgage interest rates that we often forget that there […]Read More

5 Reasons Why Mortgage Banks Charge Different Rates; Mortgage Rates Don’t Correlate To Other Rates

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JVM funded $135 Million in mortgages for the month of September – a new all-time record for us. Our “Big Hairy Audacious Goal” was $125 Million, and we pretty much crushed it 😊. Congrats to our team! WHY MORTGAGE BANKS CHARGE DIFFERENT RATES I know many loan officers whose mortgage banks pay for substantial co-marketing […]Read More

10% Down Jumbo Options; 80/10/10s; Rates Hit All-Time Lows – Yawn

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RATES HIGHER THAN IN JULY DESPITE “RECORD LOWS” Housing Wire was reporting that mortgage rates hit all-time lows again last week – and I yawned again last week. This is why. Until the mortgage industry comes to grips with its capacity issues, the actual mortgage rates that most lenders offer will not fall further. We […]Read More

Lender Credits For Closing Costs – When & Why

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Most buyers understandably want the lowest rate possible when they lock in their rate. This is particularly the case when they believe rates are at an all-time low and when buyers believe they will keep their loan for 30 years. But, as I remind readers often, very few people keep their mortgages for more than […]Read More

3 Reasons Refi Rates Are Higher Than Purchase Rates

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“The average rate posted on Bankrate.com for a 30-year fixed refinance mortgage was 3.39% Monday, well above the 3.14% on offer for a purchase mortgage, according to the personal-finance website.” That is a direct quote from this WSJ article about why refi rates are higher than purchase rates. As an aside, I love Bankrate’s “average […]Read More

Fannie Mae’s New 50 Basis Point Fee Slams Refinance Borrowers

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As I mentioned yesterday, Fannie Mae and Freddie Mac imposed a new fee of 1/2 point, or 50 basis points, on all refinance loans – catching the entire mortgage world completely off guard. What the new fee means in reality is that all refinance borrowers will now face 1/8 to 1/4 percent higher rates when […]Read More

When 1.99% Is A Bad Deal; Why Rates May Not Fall Further

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1.99% – YAY!!!! OR NOT…. (LOOK AT THE FEES) Several lenders were touting their 1.99% interest rates recently, and we were getting emails from agents and borrowers alike asking about the “amazing rates.” But, that rate is not amazing when you look at the fine print, and almost all lenders, including JVM, can offer it […]Read More

Why Low Rates Are BAD For Homebuyers

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Rates are about 1% lower than where they were last year at this time, as most people know. This enormous rate-reduction appears to be a huge boon for homebuyers, as low rates reduce payments and increase buying power. A 1% reduction in rates reduces the payment on a $500,000 loan by almost $300 per month. […]Read More

Rates Hit Another All-Time Low… Yawn; Why and Will They Go Lower?

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Rates edged lower again, allowing me to quote the lowest 30-year fixed-rate I have ever quoted (see our rates here). MARGINAL DROP/MARGINAL HELP FOR CONSUMERS Rates only fell marginally though, so it is not like borrowers with currently locked rates are missing the boat. In addition, b/c the mortgage industry cannot begin to process all […]Read More

What Happens To Rates During Election Years?

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I received this in an email on Monday: “Do you think the presidential election will have a big impact on rates if one side is elected over the other? I would imagine if Trump is re-elected rates will stay low for the next year or two in an attempt to bolster the economy.” PRESIDENT CAN’T […]Read More

7 Myths About Motorcycles and Mortgage Rates

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OK – I am not really going to blog about motorcycles, but I did see a video last night called 7 Myths You Shouldn’t Believe About Motorcycles, and it got 2.3 million views! The video maker joked about how well list-style-video-descriptors attract viewers (which is a great marketing reminder). So, I thought I’d try it […]Read More

Examples of How Much Various “Factors” Affect Interest Rates

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We constantly remind everyone that there is no “one interest rate,” because so many factors affect individual rates. I linked to those factors here and set them out again below. We often get questions though in regard to how much each of those factors affects a borrower’s interest rate, so I am providing some examples […]Read More

“Fed Plans to Keep Rates at Low Levels for Years” What Are “Rates?”

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This blog’s subject line is borrowed directly from this WSJ article. Fed Chairman Powell stated in early June that there are no rate increases in sight and that the Fed will do whatever it has to do to keep rates down through 2022. These actions include keeping the Fed Funds rate near 0% and massive […]Read More

Why Borrowers Should Not Pay Points to Buy Down Interest Rates

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This is a topic I touch on or repeat at least once per year b/c borrowers continue to ask us if they “should buy down their rate,” and our answer is almost always “no.” EVERYONE WHO PAID POINTS IN 2009 WASTED THEIR MONEY In 2009, when rates fell below 5% we refinanced our entire database […]Read More

Rates Edge Higher Again; Normality? Will Rates Fall Further?

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Mortgage interest rates edged higher again today, and the 10 Year Treasury is at its highest level since late March. Rates edged higher largely in response to a stronger than expected employment report; unemployment was expected to hit 20% but was instead at 13.3%. So, we are back to “normal” to some extent b/c mortgage […]Read More

Great Housing Migration; Credit Repair More Necessary Than Ever

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Chris Drayer, the founder of the Predictive Analytics company (Revaluate) we often recommend, wrote a great blog a few weeks ago called The Great Housing Migration. His point: People will likely be moving to the suburbs in droves once again – for many reasons. They can work remotely. COVID-19 has shown us all that working […]Read More

Rates Hit Record Lows – Again; Forbearance Effect On Credit

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FORBEARANCES, CREDIT, & ABILITY TO GET MORTGAGE FINANCING I recently blogged about how forbearances will affect credit and a borrower’s ability to obtain mortgages, pointing out how borrowers just out of forbearance will have to “season” their forbearance for 3 months before they can get new mortgage financing if they still have a past due […]Read More

10 Cent Beer Night in Cleveland in 1974; How It Relates to Our Economy Now – More Black Swans

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In 1974, the Cleveland Indians baseball team promoted Ten Cent Beer Night for a game against the Texas Rangers. Fans showed up in droves for the cheap beer and drank it by the gallon. The inevitable result was an entire stadium full of drunken fans, bench clearing brawls, a 9th inning riot with all the […]Read More

How Low Can Rates Go? Not Waiting To Refi

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One of the most interesting aspects of the COVID-19 crisis is its effect on interest rates. In “normal” times, mortgage rates correlate closely with the 10 Year Treasury Bond. In other words, when the 10 Year moves higher so do mortgage rates, and vice versa. Also, “the spread” or the difference between the 10 Year […]Read More

Jumbo Financing Lives! Appraisals Getting Done; Bridge Loans; Interest Rate Update

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JUMBO FINANCING STILL AVAILABLE Agents continue to ask us if we are still offering jumbo financing – and the answer is emphatically yes! Rates remain in the mid-3% range for strong borrowers with 20% down and ample reserves. Weaker borrowers (with less than 20% down, limited reserves and/or lower credit scores) in the jumbo price […]Read More

Interest Rates/Mortgage Industry Update; When NOT to File Taxes

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Interest rates have come back down but they are still about 1/4% to 3/8% higher than where they were when they bottomed out on March 9th. This is because the mortgage industry is still trying to fend off excess volume brought on by low rates and a surge of refis. And – it is also […]Read More

5 Bold Predictions For The Post COVID-19 World; COVID-19 Updates; Reason to Refi

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Forbes Publisher, Rich Karlgaard, published 5 Bold Predictions for the Post COVID-19 World. He imagined what we might see by the Spring of 2021 and predicted the following: A rebounding world economy with a fantastic global growth rate of 4%. Fully resumed global travel b/c human nature makes people want to travel no matter what. […]Read More

Contingency Periods During COVID-19 Crisis; Which Loans Are Safe; Employment Is a Huge Concern

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I mentioned yesterday that we are still getting purchase contracts and agents are still making offers, and asking us about contingency periods in light of the COVID-19 crisis. We obviously can’t close in 14 days now b/c of COVID-19-related delays, so below are some contingency/closing periods we are requesting until the crisis ebbs. We do […]Read More

3.3 Million Unemployment Claims & Rates UP! Why? Lenders Misleading Borrowers

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3.3 million people filed for unemployment last week, shattering the previous record of 700,000 set in 1982. Normally, such news would send rates into a massive downward spiral – but not in today’s world. Rates remain higher primarily b/c of the extra risks involved with mortgages now. These risks are enormous and include job losses […]Read More

Liquidity Crisis; Non-QM Shuts Down; Extreme Market Volatility; Higher Rates

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LIQUIDITY CRISIS One of the biggest issues facing our economy right now is a massive “liquidity crisis.” In simple terms this means there is far too little cash in our economy. The reasons are many and very complicated, and I list a few below. Investors are selling off assets in mass to avoid losses and […]Read More

Rates Way Up! Liquidity Crisis; Refi Later for Free; Buy Takeout Food :)

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INTEREST RATES SHOT UP AGAIN YESTERDAY Rates shot up 1/4 percent yesterday over about a 30 minute period – something we have not seen for years. Rates came back a bit this morning, but then shot up again over the last hour in an extremely volatile market. Rates are now about 3/4 percent higher than […]Read More

COVID-19/Mortgage Industry Update

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Here are a few reminders and key updates that are warranted (despite some repetition) b/c the overall situation remains so fluid and b/c we are still getting so many questions. MORTGAGE INDUSTRY REMAINS OPEN Most lenders remain open and fully operational and are still funding and recording loans (with most team members working remotely), as […]Read More

Bay Area Shutdown; COVID-19 Update; Delays; Appraiser Shortage; Rates Not Falling

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As everyone in the Bay Area now knows, the entire Bay Area is subject to a mass “Shelter in Place” order by local health authorities in an effort to combat the spread of COVID-19. I won’t go into all of the details here, but it restricts all large gatherings and major events, and only “essential […]Read More

Mortgage Rates Barely Move; Hell Actually Breaks Loose; Fed Cuts Rates to Zero

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FED CUTS FED FUNDS RATE TO ZERO; $700 BILLION IN QUANTITATIVE EASING In a shocking and surprise weekend move, the Fed cut the Fed Funds Rate to 0% yesterday – which may or may not have moved mortgage rates for reasons I explain often (cuts in short-term interbank borrowing rates don’t often translate to cuts […]Read More

Stocks Down; Rates Up; DELAYS Caused by Coronavirus and Refi Boom

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NORMALLY – WHEN STOCKS FALL, RATES FALL (BUT NOT THIS WEEK) The Dow Jones stock market index peaked at 29,551 only 1 month ago (on Feb 12th). As I type this on March 13th, the index has fallen to 21,362 – a staggering 27% drop. Initially, as everyone knows, mortgage interest rates plummeted along with […]Read More

What Happens When Entire World Wants to Refi? RATES WAY UP; Turmoil; Service Way Down

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In January and February, interest rates dropped as much as 1/2 percent over the course of a few weeks and the mortgage industry experienced a refinance boom like it has never seen before. The result is now higher rates, confusion, turmoil and utterly inadequate capacity. Lenders are not even close to being able to handle […]Read More

Fed Rate Cuts Don’t Mean Mortgage Rate Cuts

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We were asked a variance of the below question over and over yesterday: “I heard that the Fed cut the rate by 1/2 percent; can I lower my mortgage rate by 1/2 percent?” We would respond by explaining that the “Fed Funds Rate” often does not correlate to mortgage rates for a variety of reasons. […]Read More

Interest Rates Hit All-Time Low? Yes & No

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10-YEAR TREASURY YIELDS HIT ALL-TIME LOW; MORTGAGE RATES DON’T ALWAYS FOLLOW THE 10-YEAR There is so much talk about rates hitting “all-time lows” that I wanted to discuss it in a blog quickly. 10-year Treasury bonds are hitting all-time lows and then some, currently sitting at 1.16% as I type. It is the 10-year Treasury […]Read More

Why Does Coronavirus Affect Rates So Much? Will It Last?

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Rates remain near all-time record lows and Coronavirus concerns are the primary reason why. REASONS FOR CONCERN Spanish Flu: The Spanish Flu epidemic from 1918 – 1920 infected 27% of the world’s population (or 500 million people). It ended up killing between 50 million and 100 million people, making it the deadliest epidemic of the […]Read More

Rates Keep Falling; Rates Keep Falling, Down, Down; What’s Going On?

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I stole my subject line from the 1985 Simple Minds song – Don’t You Forget About Me… OK – they might have actually sung “‘Rain’ keeps falling…” but I was an economics-obsessed econ major, so I heard “Rates.” Because rates were falling! From almost 18.5% in 1981 all the way down to 12% in 1985! […]Read More