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

Good News! Fed Says Rate Increases May Halt

We have almost 1,000 pre-approved borrowers in our pipeline and all of them breathed a sigh of relief yesterday. The reason? Two top officials from the Federal Reserve recently implied that the Fed may be done or close to done pushing up rates (a December increase is still likely). Our pre-approved borrowers should be delighted […]Read More

What Could Bring Rates Plummeting Back Down?

According to Freddie Mac, the average 30-year fixed rate mortgage was 4.83% in October. We have not seen rates that high since 2011, and the Fed seems determined to continue to push rates up. Even though it seems likely that rates will continue to climb, there are some things that could bring them down again. […]Read More

Rates Down Despite Fed’s 4th Increase in One Year; Why?

On December 14th, 2016, I quoted a rate of 4.0%* in this blog. Today I will quote 3.75%. It is interesting that 30 year fixed rates have fallen 1/4 percent over the last year even though the Fed has ostensibly increased rates four times. The Fed increased rates yesterday again and 30-year rates are lower […]Read More

Why Higher Interest Rates Are Good

After last November’s presidential election, rates shot up 3/8 to 1/2 percent and the real estate market seemed to come to a standstill. It scared everyone into thinking that higher rates would severely impact the real estate market overall. But, it was really just “uncertainty” that kept everyone on the sidelines, and not the higher […]Read More

What Ever Happened to APR? Annual Percentage Rate

Best quote of the day from the WSJ (Jason Gay): “Watching the Cleveland Browns is like watching a golden retriever make Thanksgiving dinner. Enthusiastic, yes, but not very successful.” I loved that b/c we work with all too many golden retrievers :). Every lender is required to quote an Annual Percentage Rate, or APR. APRs […]Read More

When Can Borrowers Lock In Their Interest Rate? Winning Pumpkin Muffin Recipe!

Borrowers who are still in the pre-approval stage or making offers on properties often ask if they can lock in their interest rate when they hear rumors of pending rate increases. For purchases, we are usually unable to lock in a rate until we get a ratified purchase contract that identifies a specific property address […]Read More

What Affects Rates For An Individual? A Lot!

Yesterday, I wrote an all too complex explanation about macroeconomic influences on interest rates, and got this wonderful feedback from a top producing KW agent: I’m dying of boredom reading this….😁 OK – that is not the feedback we hope for, but I was just trying to be thorough…  :). Today’s subject will be simpler […]Read More

Factors That Influence Interest Rates

Many people think the Fed is the primary mover of interest rates, but there are many other factors. Some of the factors and some key concepts are explained below. The Fed: The Federal Reserve does influence rates with its policy statements, its open market operations (buying and selling bonds), and its primary tool – the […]Read More

Timing The Bottom For Rates? Get While Gettin’ Is Good

Borrowers often ask us if we think rates will fall further before they lock, and they often want to “time to the market” and lock in their rate at the “bottom.” As a result, they are sometimes reluctant to lock or get us their paperwork. This in turn delays purchase transactions and sometimes causes borrowers […]Read More

Rates Down After Fed Pushed Rates Up? Why?

The Fed raised the short-term Fed Funds rate yesterday by 1/4% to a range of 0.75% to 1.00%. And long term interest rates fell. Here are a few reasons why this happened. First of all, the markets anticipated the increase and had already accounted for it. Rates actually improved after the increase was announced, in […]Read More

Higher Rates Won’t Hurt Housing Prices Per Fannie Mae Economist

Several Realtors have asked us recently about the effect of higher rates on housing prices. This is b/c their own clients are concerned about buying now and risking a decline in values. According to Fannie Mae’s Chief Economist, Doug Duncan, rate increases usually do not portend a decrease in values for several reasons. 1. If […]Read More