So you heard mortgage rates dropped right? Then you called your lender to ask about refinancing and their rates are much higher than what you are hearing about – correct? The market is absolutely crazy right now. Last week on Tuesday we saw the lowest rates in years – maybe ever. Within two days, the market was all over the place. So many people started refinances that lenders were overwhelmed. By the end of the week and especially by this Monday, rates are up – at least for those trying to refinance. So what is going on?
Here are some of my thoughts on this:
- Lenders are pricing up to control volume and are concerned they can get them done and sold.
- Investors are pricing up because they cannot determine where the market is trending.
- Typically the Mortgage Back Securities move with the Treasury market and inverse of the stock market, however right now the exact opposite is happening.
- The Coronavirus was just labeled a world-wide pandemic.
- Across the world countries are trying to implement stimulus packages to boost the economies.
I looked online at rates and some of the rates quoted by major banks are higher now than they have been in weeks – maybe months. Based on the bond market and stock market, rates should be much lower than they are.
For those that did lock in a refinance last week, make sure you get everything to your lender that they need. Appraisals are taking longer, underwriting will take longer, you want to make sure you get your file done before your lock expires – or you may have to pay to extend it.
Are you looking at buying a home? Interest rates are still great. However the market is all over the place. So if you are talking to your lender about interest rates, know that they can change quickly. Wednesday we had 2-3 price changes before noon. I quoted rates to a client and within 30 minutes, that rate was no longer available. So you may have to make a decision quickly. I know that we are focusing on purchase business and making sure you are able to make your closing date. You may want to wait a few days for the market to settle down but there is no guarantee where interest rates will be in a few days. There is discussion that the Fed may lower rates another .25% point at their meeting this month. There is also discussion that the federal government may step in with some stimulus packages. Both of these could help interest rates but they may also hurt them. If you have a purchase agreement and are not locked in, stay in touch with your loan officer and make sure you know what is going on with interest rates.
We are hoping the markets will calm down in the next week or two. In the meantime, it’s a roller coaster!! What we do know is that interest rates are great, it’s a wonderful time to look at buying a new home! Let me know if you have any questions!
Leslie Vanderwerf, NMLS ID#335509, AMEC Home Loans, An Equal Housing Lender, NMLS#150953 – Email – Website
