Early February interest rates hit record lows causing a major spike in mortgage refinance applications after the Coronavirus pandemic crashed into the U.S. stock market. It seemed like everyone in your family and at your job were talking about refinancing. And why wouldn't they? Rates were SO GOOD we even ran ads and posted a blog about it!
Beginning last week, we noticed interest rates starting to go up... and up... Quotes we sent to clients the previous week were off by .25%+ (in some cases rate jumped up .75%). Some borrowers decided to wait to see what the next day would bring, which resulted in an even higher increase in rate and fear began to set in.
*Fun fact: We work with 6 different lenders which gives us the ability to shop around on behalf of our clients to see who has the best rate & program to fit each individual's needs.
**Not so fun fact: EVERY lenders' rates increased.
We, (especially Stephanie), were in full PANIC mode.It just wasn’t making any sense! The stock market is nearing (or at) recession levels, the Feds implemented a surprise emergency rate cut and the whole world is in turmoil. Meanwhile, the news is still advertising low-interest rates (we’d like to know where they are getting their current numbers from), borrowers are confused and WE were confused…
The Inhabit team submits the loan file to the lender while FLOATING the lock. *FYI: credit reports, income docs and loan approvals are good for an average of 120 days.The market is going to come back down WELL before any of our docs expire.
You will receive daily rate updates from us until you say "LOCK!".
Being FULLY prepared to lock once the rates come back down will be a HUGE advantage to borrowers!
Fun Fact: Before rates started to climb, some lenders (none of the ones we work with thankfully) were told they had to do 90-day lock periods(as opposed to the regular 30 days) due to the volume of refi applicants and lack of staff to process the workload.
A MORE IN-DEPTH LOOK (IF YOU'RE CURIOUS):
The current volatility our markets are experiencing is not normal. This type of movement isn’t typical over the course of an entire year, let alone on a day-to-day basis!
FYI: We have been experiencing up to 4 price changes in a single day among multiple lenders. This is very unusual and a perfect example of the current unpredictability of the market.
The bottom line: Lenders are broke! Borrowers are refinancing AGAIN after just closing in 4th QR 2019, causing lenders and mortgage servicing companies to record large losses.
FYI: New loans are sold on secondary markets to servicing companies who do not anticipate early payoffs for packages of loans they just purchased. This results in a huge loss of investment for them.
We are just now starting to see the effects of the Coronavirus here in the U.S. – NBA season is canceled (!?!), heavily restricted travel (ban to and from Europe), big events canceled and trade-shows canceled. What we have NOT seen is the true FINANCIAL LOSS this is causing. If we think the market is bad now, just wait until 1st and 2nd QR numbers are released.