New Home Buyers - Anyone getting a rate lock post Trump ?

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fortune11

New member
Interest rates have soared higher last few days post election with all the talk of added spending and tax cuts . 

Question to new home buyers who are more than 6 months away from escrow - are you worried enough to lock in rates now ?

If so, any good mortgage brokers offering competitive locks ?

thanks in advance
 
I always approached buying a new build with great trepidation for this very reason! Trump notwithstanding, how can anyone reasonably predict interest rate movement over several months? Some lenders that work with the builders do have a rate-lock protection guarantee, but I've found that 1)they're very pricey and 2) you lock at the current rate plus some small margin (.25% or so) in case rates rise, but they would float if rates drop. In any case with a lot of people stretching to qualify, those small rate moves can have quite an impact. Having said all of that, the bond markets are probably overreacting a bit and if you have the time (and courage) it probably makes sense to float and see if things improve over the next few days/weeks. I am not a mortgage broker or LO but have done many loans btw.
 
BruinDoc said:
I always approached buying a new build with great trepidation for this very reason! Trump notwithstanding, how can anyone reasonably predict interest rate movement over several months? Some lenders that work with the builders do have a rate-lock protection guarantee, but I've found that 1)they're very pricey and 2) you lock at the current rate plus some small margin (.25% or so) in case rates rise, but they would float if rates drop. In any case with a lot of people stretching to qualify, those small rate moves can have quite an impact. Having said all of that, the bond markets are probably overreacting a bit and if you have the time (and courage) it probably makes sense to float and see if things improve over the next few days/weeks. I am not a mortgage broker or LO but have done many loans btw.
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thanks .

one of the offers i am seeing through the builder is 3.5 percent for 5/1 w 1.875 pts . 

pts seem steep , but if rates really blow out by next year may it will be worth it

although another logic says if rates really blow out that much as to make 1.875 pts worth it , then the home is probably worth a lot less by that time so maybe there is a scenario where walking away from the deposit may be also a financially beneficial option

 
I've seen 3.5 (as of yesterday) with no points on a 30 year fixed (just through my credit union...didn't look hard so not sure if that is an outlier or not...wouldn't have thought it would be though). I have no idea why you would elect for that rate on a 5/1 ARM. The 30 year fixed is non-conforming. Conforming was 3.75%. 
 
Bullsback said:
I've seen 3.5 (as of yesterday) with no points on a 30 year fixed (just through my credit union...didn't look hard so not sure if that is an outlier or not...wouldn't have thought it would be though). I have no idea why you would elect for that rate on a 5/1 ARM. The 30 year fixed is non-conforming. Conforming was 3.75%.
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Most jumbo-conforming loan now surpass 4.125 and higher with some kickback. Rates are going up for sure. Question is how much more and over how long period of time before it reverse if any?
 
Bullsback said:
I've seen 3.5 (as of yesterday) with no points on a 30 year fixed (just through my credit union...didn't look hard so not sure if that is an outlier or not...wouldn't have thought it would be though). I have no idea why you would elect for that rate on a 5/1 ARM. The 30 year fixed is non-conforming. Conforming was 3.75%.
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This rate for the ARM is with a 365-day lock .  I will probably get a lower rate for a near term financing . 
 
Also, another concern which I have is while rates are going up , home prices have become stagnant or even falling in some cases and unless income growth picks up meaningfully to create broad based inflation which also lifts real estate prices with it, home equity trends may start to turn negative

What do others think about this ?
 
fortune11 said:
Also, another concern which I have is while rates are going up , home prices have become stagnant or even falling in some cases and unless income growth picks up meaningfully to create broad based inflation which also lifts real estate prices with it, home equity trends may start to turn negative

What do others think about this ?
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Why is everyone so concerned about rates going up and how adversely it will impact home prices?  Normalization is good. Why is rate going up in the first place?  Primarily because of inflation and future growth expectations.  This means, Wages, CPI, cost of building materials are expected climb.  If inflation prices go up that means rent prices go up.  Replacement cost for your home will also climb.  Wages, rent prices, replacement costs all go up  than most likely your home prices will continue to trend higher. 

Real estate and other tangible assets are hedge to inflation.  Also, Trump is pro-real estate so that's good.  Don't worry so much.  Home prices will continue to climb from here.  Buy while you can!  Look at the inventory in Irvine.  It's crazy low.  Probably seasonal, but you can't find anything descent other than new construction homes.  Stonegate has like 4 re-sales available.  We had strict underwriting standards.  With de-regulation and Trump, the lending standards will loosen.  This means fresh new $$ into real estate for first time home buyers and millennials.  Also, lower taxes and elimination of estate taxes.  Baby boomers going to past more after-tax money into young millennials.  I am bullish on housing as you can tell=)
 
One thing to consider when spending $$ on long term rate locks. Yeah, 3.5% on a 5/1 ARM might look good today IF rates zip up higher. Let's assume they do. When you locked, did you also lock in the qualifying rate? No... no you did not in many cases.

Most lenders are qualifying borrowers at 3.875% for ARM loans today. If LIBOR blows out to a 4.25-4.50% qualifying rate, even if you're at 3.50%, you might not be approved if your ratios go up as well.

Do I think that will happen? No one has any idea, including me so don't take anyone's "where are rates going to be in a week/month/day/year?" advice right now.  I'd consider all options when grabbing a long term rate lock including locking a fixed, and floating down to an ARM (if that's possible) in 2017 when your home is completed.

For those who must check every single day here's a reasonable table of genuine rates:

http://www.mortgagenewsdaily.com/mortgage_rates/daily.aspx 

Average Jumbo 3.72 on 10/12 and now 4.0 on 11/10. Not quite the end of the world, but enough of a move to quicken the heartbeats of many a buyer.

My .02c

SGIP
 
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