Examples of How Much Various “Factors” Affect Interest Rates

We constantly remind everyone that there is no “one interest rate,” b/c so many factors affect individual rates. I linked to those factors last week 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 […]Read More

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

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

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?

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

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

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

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

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

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

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

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

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

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

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 :)

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

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

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

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

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

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

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

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?

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?

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

5 Key Credit Reminders & Misconceptions

#1 – Consumer credit scores are not the same as mortgage credit scores. Borrowers often share their credit scores with us, as if those scores are set in stone. Those scores, however, are often generated by online “consumer” oriented scoring models that are much less stringent than the scoring models mortgage lenders employ. As a […]Read More

Signing Bonuses = Higher Rates; No Free Lunch In Mortgages

Heejin and I have been offered seven-figure “signing bonuses” (in exchange for aligning with a new mortgage bank) on numerous occasions by large mortgage banks trying to lure JVM under their umbrellas. We always say “no thank you” without hesitation b/c we know for certain that there are no free lunches in the mortgage world. […]Read More

Why I Was So WRONG About Interest Rates Rising – Part CCXXIX

If you Google the word “Wrong,” the below picture pops up in the results: OK… that is a real photo taken at a holiday party (in a photo booth – thank you Danny Winkler) when I really did think rates were going to shoot up. BUT, I am pretty sure I was not thinking about […]Read More

Rates Do NOT Always Go Down In Election Years

We have a great client who was holding off on a “no cost” refinance because he was convinced rates were going to fall further this year “because it’s an election year.” But fortunately, he finally locked in his rate last week, taking advantage of the temporary rate drop (caused by the Iran skirmish) right before […]Read More

Geopolitical Strife & Interest Rates; “Flight to Safety;” Trends

After I heard the news of the Iranian missile attacks against U.S. bases in Iraq, I 100% expected rates to be significantly lower this morning. And, I was 100% wrong. Rates are holding relatively steady. SKIRMISHES, WARS AND “FLIGHTS TO SAFETY” Typically when there is significant geopolitical strife (wars, skirmishes, threats of war) of any […]Read More

Rate Buydowns Instead of Price Reductions; BETTER for Everyone!

We are starting to see a lot of stale listings at the higher end of the market. This is b/c “slow season” is starting and b/c the high-end market seems to be slowing in general due to affordability issues and anxieties about the market overall. As a result, we are seeing frequent price reductions that […]Read More

Why Interest Rate Might Be Higher at Contract Time Than at Pre-Approval Time; Not a “Bait & Switch” :)

We pre-approved a borrower in August and sent him numerous estimated payment scenarios, based exactly on the interest rates available at that time. When he went into contract in mid-September, we locked him at a 1/4% higher rate than what we estimated in August. The borrower was upset b/c he thought we pulled a “bait […]Read More

Why “Refi” Rates Are Higher Than “Purchase” Rates

Refinance borrowers sometimes see the rate quote in my daily blog and ask why their rate is higher than the “purchase money” rate quote in my blog. B/c this has been happening more often than not lately, I thought it warranted a brief explanation. ASSUMPTIONS FOR BLOG VS. FACTS FOR REFI The assumptions we use […]Read More

Rates Fell Again – Why? Unexpected, As Per Usual

Rates have moved steadily lower over the last week. And, as per usual, nobody saw it coming. The unexpected news that pushed rates down included the following: Nancy Pelosi’s Impeachment Inquiry. Major uncertainty in both political and economic arenas tends to push rates down. Waning Consumer Confidence. Traders watch these surveys closely and react sharply […]Read More

The Fed Cut Rates by 1/4 Point And Mortgage Rates Fell Marginally

The Fed cut the Fed Funds Rate by 1/4 percent yesterday, and rates…actually fell after the announcement. I was almost disappointed to see that b/c it will again confuse people about the influence the Fed has on mortgage rates. Briefly and once again – the Fed cut “The Fed Funds Rate” which is a short […]Read More

Will Rates Fall Again? Yes, But Probably Not Soon

Barry Habib is a relatively famous mortgage industry pundit and a Broadway musical producer (l learned today) who was on The National Real Estate Post today discussing the future of interest rates. He has a lot of credibility in the industry as of late b/c he has become relatively skilled at predicting interest rate movements, […]Read More

Mortgage Debt Hits Record High of $9.4 Trillion! Time to Worry?

  According to this WSJ article, mortgage debt hit a record high of $9.4 trillion in the 2nd Quarter of this year. This exceeds the previous record of $9.3 trillion set in 2008, prior to the mortgage meltdown. Should we be worried that we are now back to pre-meltdown debt levels? In a word – […]Read More

Trade Wars Spark Lowest Rates Since 2016; Why?

Over the last four business days, rates have fallen to their lowest levels since 2016. The primary reason is an escalating trade war with China; it was not the Fed’s rate cut, as I have now mentioned more than a few times, as the rate cut was highly anticipated and fully accounted for long before […]Read More

When Can Borrowers Lock Their Rate? Rate Volatility

BORROWERS OFTEN WANT TO LOCK PRIOR TO GETTING INTO CONTRACT Borrowers often want to lock in their interest rates prior to going into contract (they typically want to take advantage of low rates before they go up). We are unfortunately unable to do so b/c we need to identify a property address before we can […]Read More

Why Fed Rate Cuts Often Don’t Result In Lower 30-Year Fixed Rates

The Fed reduced the Fed Funds Rate by 1/4 percent and 30-year fixed rates are actually now slightly HIGHER. I have blogged about this paradox many times b/c it is so confusing to borrowers and agents alike. Many of our clients are in fact asking us if they can now get a 1/4 percent lower […]Read More

What Moves Interest Rates

I’ve touched on interest rates often in recent months b/c the most recent drop has been so surprising. Examples: Are Low Rates the New Normal? Rates Hit 19-Month Low; Will They Stay Low Borrowers and agents alike are nevertheless still asking if rates will stay low or move lower, so I thought it was time […]Read More

Rates – “Sticky” Down; “Slippery” Up; Why We Like to Lock

Rates moved higher today primarily in response to the removal of tariff threats with Mexico. I mention often how good economic news (regarding employment, retail sales, GDP growth, trade, etc.) usually moves rates higher while bad news tends to push rates lower. But, the market’s response to good and bad news is not always proportional. […]Read More

“Rates Hit 19-Month Low” – Why? Will They Stay Low? Rate Roll-Downs

Rates hit a 19-month low and the headlines prompted some of our borrowers to ask about “rolling down” their locked-in rates. RATE “ROLL-DOWNS” Rates, however, have been hovering very close to their current levels for the last few months. So, while rates have bottomed out, the improvements have been marginal. When lenders lock in a […]Read More

7 Dangers From Falling for “Rate Quotes”

Our borrowers come to us constantly with rate quotes from other lenders, and that is all well and good because our rates are very low and we love competition! What is not good though is that those quotes are often misleading or inaccurate, or they can’t be honored at all. And worst of all from […]Read More

How Points, Origination Fees and Lender Credits Affect Rates

In Friday’s Blog, I pointed out how many things affect a buyer’s interest rate, including Credit Score, Loan Amount, Property Type, Lock Period, LTV, etc. But – I received questions asking how “points” and “origination fees” affect rates – the subject of today’s blog. POINTS, ORIGINATION FEES, & DISCOUNT POINTS Even though distinctions can be […]Read More

There Is No “30 Year Rate;” Many Factors Influence A Buyer’s Rate

We often have buyers or agents ask: “What is your 15-year rate today?” Or “What is today’s interest rate?” We always respond by explaining there is no single rate, b/c the market moves so often and b/c there are so many things that affect an individual borrower’s rate. Here are factors that influence an individual’s […]Read More

Why Rates Matter So Much Now

GOV’T SHUTDOWN UPDATE The IRS has agreed to process tax transcripts (tax return verifications). This is good news, as this could have held up the funding of numerous loans. REALTOR DROPS LOAN OFFICER B/C HIS RATES WERE TOO HIGH My wife Heejin recently visited a Realtor who had been using the same loan officer for […]Read More

The Fed Lost Control Over Interest Rates; Now What?

RATES AT 8 MONTH LOW Rates are at an eight-month low right now – about 1/2 percent lower than they were at their peak in October. I should add though that they still remain about 1/2 percent higher than they were last year at this time. So, did the Fed finally achieve its stated goal […]Read More

Two Areas Big Banks Beat Us: CRA and Private Banking

I mentioned yesterday that we have been beating the “big banks” across the board on the interest rate front. But, there are two areas where we rarely beat the big banks in rate: CRA Loans and Private Banking. CRA LOANS CRA stands for Community Reinvestment Act. It is a law that “encourages” (aka requires) banks […]Read More

Surprising Reasons Why People Are Refinancing

The Fed raised short-term rates again yesterday but rates still remain much lower than expected. Part of the reason is that investors think the rate increases will hurt the economy at this point. As a result, investors moved from stocks to bonds and this demand for bonds keeps rates lower than expected. In any case, […]Read More

Jumbo Rates Are LOWER Than Our Conforming; Jumbo vs. Conforming

Our Jumbo rates are as much as 1/2 percent lower than our Conforming (Fannie and Freddie) rates. Our low Jumbo rates are also available for qualified borrowers down to the “low balance” conforming loan limit of $484,350. These very low Jumbo rates are highly unusual and there are several reasons for this including: (1) Fannie […]Read More