Author Topic: How high will mortgage rates climb in the next 36 months?  (Read 5863 times)

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Offline OCtoSV

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How high will mortgage rates climb in the next 36 months?
« on: August 24, 2022, 01:41:30 PM »
I was shocked at where they've already risen to for a 20% down/no cost 30 yr fixed $2M purchase when i just checked:
San Diego County Credit Union

6.875%
30 year

6.878% APR

$434 fees

$10,511/mo

Offline CalBears96

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #1 on: August 24, 2022, 02:07:38 PM »
There are plenty of lenders much LOWER than 6% with no fees. With some fees, you can go below 5% even. In fact, I did a search and there's NONE that's even above 6%.

Offline woodburyowner

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #2 on: August 24, 2022, 02:10:03 PM »
Different banks/lenders all sell different products at different price points.  It's pointless to compare a CU that might specialize in conforming loans with a large national bank that specializes with a jumbo product. 

Offline OCtoSV

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #3 on: August 24, 2022, 02:25:23 PM »
There are plenty of lenders much LOWER than 6% with no fees. With some fees, you can go below 5% even. In fact, I did a search and there's NONE that's even above 6%.

This was straight off Bankrate.com, and the SDCU rate didn't even have a link to click, nor did any of the other low cost loan providers, all CUs. The only ones with a link to proceed (PNC, Watermark, Angel Oak) were 4.75% to 5.5%, all with ~$30K in upfront costs. Bankrate.com does not list a single low cost loan provider willing to engage in a loan.

Offline CalBears96

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #4 on: August 24, 2022, 02:37:20 PM »
There are plenty of lenders much LOWER than 6% with no fees. With some fees, you can go below 5% even. In fact, I did a search and there's NONE that's even above 6%.

This was straight off Bankrate.com, and the SDCU rate didn't even have a link to click, nor did any of the other low cost loan providers, all CUs. The only ones with a link to proceed (PNC, Watermark, Angel Oak) were 4.75% to 5.5%, all with ~$30K in upfront costs. Bankrate.com does not list a single low cost loan provider willing to engage in a loan.

Since you mentioned Bankrate.com, then how about also mentioning Bank of the West just below SDCU with a rate of 4.75% with $793 fees? Or Schools First SCU with a rate of 4.875% with $995 fees? Obviously SDCU is an outlier and you just cherry picked it for your data.

Offline OCtoSV

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #5 on: August 24, 2022, 03:05:25 PM »
There are plenty of lenders much LOWER than 6% with no fees. With some fees, you can go below 5% even. In fact, I did a search and there's NONE that's even above 6%.

This was straight off Bankrate.com, and the SDCU rate didn't even have a link to click, nor did any of the other low cost loan providers, all CUs. The only ones with a link to proceed (PNC, Watermark, Angel Oak) were 4.75% to 5.5%, all with ~$30K in upfront costs. Bankrate.com does not list a single low cost loan provider willing to engage in a loan.

Since you mentioned Bankrate.com, then how about also mentioning Bank of the West just below SDCU with a rate of 4.75% with $793 fees? Or Schools First SCU with a rate of 4.875% with $995 fees? Obviously SDCU is an outlier and you just cherry picked it for your data.

look closer - no link for next steps. Call them up and see if they're still making loans. with no Fed buyer the mortgage securitization machine has ground to a halt.

Offline Soylent Green Is People

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #6 on: August 24, 2022, 03:17:55 PM »
The Freddie Mac Average (quoted by all news media) is a "look back" indicator averaging all transactions - purchase or refinance - closed over the last week. Today, that average is 5.13% for .8 in fee. This means a zero point 30 year fixed rate purchase is 5.25 to 5.375 on average (APR unknown). If some lender (bank or non-bank) is quoting something lower it's likely a non-agency loan.

My bank is SchoolsFirst. They partner with a mortgage banker, but have a small set aside of funds for portfolio use. If SF is quoting a 4x handle rate, it's for a portfolio jumbo, not a Conforming High Balance or Standard Conforming. With the Fed all but certain to raise the rates they control by .75% in September, the days of a 4.0% (APR unknown) handle loan may be coming to a close. How high will things go? I've said from the get go that we should approach 7% for most loans during this current cycle. The 7 percent handle isn't the point. The point is that all rates are cyclical. Close at 7 if you can while getting the home that fits your needs. There is a likelyhood - but never a certainty - that lower rates may be ahead. Given that this will be my 4th or 5th Real Estate Turning, my belief is that loan terms will come back down into the 3's within 12-18 months.

House prices are not falling because of high mortgage rates. House prices are falling because of fear - employment, inflation, and instability both here and abroad. Once that fear begins to subside home prices should find a support level, as mortgage rates begin to fall back depending on how hard a landing we get during our present recession.

Remember this dear reader when considering a Non-Agency loan priced deep into the market. That product and those terms are for the most vanilla of transactions. Very few people can fit within that buy box. Chasing the lowest rate in this market is a game for fools. Find someone who will close - even if it means applying with 2-3 lenders - is the real key to success today.
« Last Edit: September 20, 2022, 01:47:13 PM by Soylent Green Is People »
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Offline trematix

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #7 on: August 24, 2022, 03:20:15 PM »
Hit up Sherry Wang at Citi. She's a legend.

Offline USCTrojanCPA

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #8 on: August 24, 2022, 05:41:55 PM »
Jumbo rates are in the 4s.
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Offline Soylent Green Is People

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #9 on: August 24, 2022, 06:15:05 PM »
True, Jumbo (Non-Agency/Non-Conforming) remains in the high 4's. In many cases you can use a Jumbo loan down to $647,300 but acceptable ratios are tight, cash reserves are significantly different and a host of other hurdles.  Some banks won't lend Non-Agency on rentals or to first time home buyers. The rates are attractive, but the rules can be very difficult. Be sure to find out what can be done before focusing on what the rate may be.

On the plus side, let's look at BAC jumbo rates for today. I'm seeing 4.875 30 year fixed for a $1.5m purchase with 20% down. The APR is 4.972 because the website shows a .876 cost to get the rate. That said, it's not the rate you will get. Why? BAC uses a 740 FICO online. Yours is 800. You bank at BAC, and with a high enough balance, your going to get a .25 in fee benefit. Because you have funds to transfer, you could be eligible for a .125 rate reduction. (Most banks have near equal rate/fee improvement options - be sure to check first). The net net of this all is probably a rate of 4.625 for -0- points, perhaps lower. 

Best advice I can give would be this: Don't rely on them intarwebs to price compare a loan. Rate data is highly influenced by relationship factors that cannot be overlaid on-line to get an accurate idea of what the terms will end up being. Work with 2-3 banks. Have all of them run your credit (no, it will not impact your score..... that's an urban myth) so that competition will also sharpen the numbers. Finally, commit to one group AFTER YOU ARE UNDER CONTRACT - because any rate quoted prior to being under contract is akin to being the financial equivalent of tech vaporware.  With real estate sales slowing and mortgage lenders wondering why the phones aren't ringing, there is currently an explosion of "Oh, my rate is this...." only to be "Oh, my rate is now this because the property is X, or the Fed just moved rates, or your score changed".... In many ways this is why there has been an uptick of resale contract cancellations due to "buyer couldn't perform...."

Best wishes to readers in getting a good deal delivered, not just "quoted", and that the home you have been looking for is finally priced well.

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Offline sleepy5136

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #10 on: August 24, 2022, 09:12:37 PM »
Hit up Sherry Wang at Citi. She's a legend.
^^ Sherry Wang is a legend indeed. I don't know how she does it but she always gives the best rates + $$$ back. Extension locks not an issue too.

Offline Soylent Green Is People

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #11 on: August 25, 2022, 07:22:20 AM »
After decades of  being a large bank with a small mortgage footprint, Citi stepped on the gas in late 2021 offering Non-Agency Jumbo loans at prices practically too good to be true. Just like BofA did in 2015, and just as USBank did in 2019.

Lenders set their own buy box of loans up every quarter. Some now favor Standard Confirming loans, some price FHA/VA loans aggressively. Key Bank in Irvine has tremendous Non-Owner terms, filling a gap in the mortgage market nicely. Other lender fill their portfolio with Jumbo ARM loans because of the economics of these mortgages. The point being is that lender competiveness ebbs and flows every quarter.

Citi's unbeatable Jumbo pricing in 2021 and early 2022 is today priced closer to all other banks. BofA who abandoned the market in during the pandemic has been offering some very attractive deals of late. It may be they are now in need of Non-Agency paper in their portfolio. I don't work for them so this isn't a commercial for BAC. It's more an underscoring as to why getting 2-3 quotes once you are under contract and can actually lock a rate is recommended.

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« Last Edit: August 25, 2022, 03:10:39 PM by Soylent Green Is People »
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Offline USCTrojanCPA

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #12 on: August 25, 2022, 08:50:49 AM »
Hit up Sherry Wang at Citi. She's a legend.

Sherry at Citi was one of the lenders that I applied with for my home purchase and their rate was good, but their appraiser capped the bed by using non-view 2-story home closed comps causing the appraisal to be $450k below the contract amount and when she filed a protest with better supporting closed comps that I provided her the appraiser basically said F off....a complete fail.
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Offline CalBears96

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #13 on: August 25, 2022, 10:37:53 AM »
Hit up Sherry Wang at Citi. She's a legend.

Sherry at Citi was one of the lenders that I applied with for my home purchase and their rate was good, but their appraiser capped the bed by using non-view 2-story home closed comps causing the appraisal to be $450k below the contract amount and when she filed a protest with better supporting closed comps that I provided her the appraiser basically said F off....a complete fail.

So basically, the appraiser is an ignorant arrogant POS then.

Offline USCTrojanCPA

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Re: How high will mortgage rates climb in the next 36 months?
« Reply #14 on: August 25, 2022, 10:57:34 AM »
Hit up Sherry Wang at Citi. She's a legend.

Sherry at Citi was one of the lenders that I applied with for my home purchase and their rate was good, but their appraiser capped the bed by using non-view 2-story home closed comps causing the appraisal to be $450k below the contract amount and when she filed a protest with better supporting closed comps that I provided her the appraiser basically said F off....a complete fail.

So basically, the appraiser is an ignorant arrogant POS then.

Yup, pretty much and killed the deal because the other 2 lender appraisers used the right comps and appraised the home at the contract price.
Martin Mania, CPA
AgencyOne
CA DRE License # 01799007
CA CPA License # 107675
mmania001@yahoo.com
714-747-3884 cell

Often imitated....Never duplicated!
Have license, will travel!

 

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