Can you list a couple such areas?
How high will mortgage rates climb in the next 36 months?
- Thread starter OCtoSV
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NEW -> Contingent Buyer Assistance Program
Not true, one of my buyers locked in a 30-year fixed jumbo rate 2 weeks ago at 5.875%. There aren't many people who took 3-5 year ARMs in the past 2-3 years as there was little rate difference between the ARM and 30 year fixed rates.
I got a funny solicitation from my mortgage servicer today announcing they have waived all fees for me to take a HE loan for the delta between my current LTV and 80%. Hooray. Of course ne mention of rate, which I'm hearing are sky high for these products.
Interesting that you see portfolio jumbos in the 6s - regardless of the Sheri Wang effect they seem to be ticking up.
I'm talking about cutting rates some time next year, probably around mid year.
If anything, I'd be more concerned of US/China tensions flaring up and if it does get to a point of war, a lot of them might cash out.
And how is anyone taking on a huge mortgage of 60% of a typical new Irvine pad not rate sensitive? ARMs aren’t that much lower than 30 FRM.
Your stats now have me even more convinced Irvine will suffer a serious adjustment which could be geopolitically related as you pointed out. I thought the FCBs paid cash!
usctrojancpa
Well-known member
Not true, one of my buyers locked in a 30-year fixed jumbo rate 2 weeks ago at 5.875%. There aren't many people who took 3-5 year ARMs in the past 2-3 years as there was little rate difference between the ARM and 30 year fixed rates.
sgip
Well-known member
Purchase rates have a premium compared to refinance rates - generally .25 or more in rate when comparing a refinance to a fixed product. You can quickly see the difference here: https://www.wellsfargo.com/mortgage/rates/ but like all financial websites, YMMV. Another consideration are seller concessions, etc that can also sweeten the rate but do not apply of course when refinancing. Still, the time to pull the trigger remains "now".
Sure - go look at closed sales in San Clemente and Coto - some downright bargains
for even more fun look at desert communities like Rancho Mirage - now would be a good time to go bottom fishing out there
That was a good rate your buyer got, but Tom Keane on Bloomberg this morning was squawking about the 7.17% 30 yr on Bankrate and asking his various guests about that number. Liquidity is drying up fast for all but the most qualified W2 buyers, and will dry up even faster once the Treasury has to raise $1T once the debt ceiling bill passes. Anyone buying now at elevated $/sq ft will be very sorry in a few years while those buying in areas showing signs of stress like San Clemente or Coto will wish they had waited for even bigger bargains.
I got a funny solicitation from my mortgage servicer today announcing they have waived all fees for me to take a HE loan for the delta between my current LTV and 80%. Hooray. Of course ne mention of rate, which I'm hearing are sky high for these products.
sgip
Well-known member
That 7.x handle is for any Agency loan product, not Portfolio Jumbo, which for the most part remain in the 6's.
Selling a HELOAN....in this rate environment? YOW! They must be desperate for cash flow. My guess is the rate is in the 9's best case, double digits for most other borrowers. I can see a HELOC being pushed, even with the Prime Rate where it is today, but not a HELOAN. During times like this if you can get a HELOC with a negative margin (Prime, minus X) it's a good time to do so. When and if the Prime Rate is declining you can get cash as needed well below normal costs.
Selling a HELOAN....in this rate environment? YOW! They must be desperate for cash flow. My guess is the rate is in the 9's best case, double digits for most other borrowers. I can see a HELOC being pushed, even with the Prime Rate where it is today, but not a HELOAN. During times like this if you can get a HELOC with a negative margin (Prime, minus X) it's a good time to do so. When and if the Prime Rate is declining you can get cash as needed well below normal costs.
Looking closer at the letter it was actually a cash out refi they are offering - like I want to lose my one action privilege while I abandon my 1.99% rate. Dream on Lakeview Servicing..
Interesting that you see portfolio jumbos in the 6s - regardless of the Sheri Wang effect they seem to be ticking up.
Informative article. Key takeaway from the end: "Bottom line: rates have risen for real economic reasons and they could go even higher if those reasons show little sign of reversal."
https://www.mortgagenewsdaily.com/markets/mortgage-rates-05262023
https://www.mortgagenewsdaily.com/markets/mortgage-rates-05262023
sleepy5136
Well-known member
Does rates going higher mean anything to housing when unemployment rate is at 3.4% and layoffs are happening to people making 400k+? Not to mention most people have either paid off their mortgages, about to pay it off soon, don't have mortgages, or locked in at a rate < 4%?
talkirvine
Member
If rates go higher, it will reduce liquidity of the whole financial system. No real estate transactions, no lending or borrowing, no credit card transactions...
CalBears96
Well-known member
Yup, and that is why the Fed will eventually cut rates.
sleepy5136
Well-known member
i don't think we are anywhere near cutting rates. consumer spending is still strong and unemployment is low. a slow down is needed to get prices back to normal.
CalBears96
Well-known member
Not right now, of course, since there seems to be one more rate increase, most likely not the next meeting in June, but the one after that.
I'm talking about cutting rates some time next year, probably around mid year.
sgip
Well-known member
Lot's of people will start talking about how "the Fed always lowers rates during an election..." as I've heard often these past few rate cycles. It's a 50/50 ratio of rate drops and rises and no clear pattern exists. If inflation stays high (as I believe it will) and employment demand stays vigorous, we won't see cuts until 2025. We may be stuck in a long term stagflationary environment and rate cuts won't pack the same sugar high as they may have in the past.
With the Bankrate 30 now at 7.38 what are strong Irvine buyers locking for jumbos these days?
Ready2Downsize
Well-known member
When they cut rates, they know they broke something. They were lowering rates after the 1987, 2000 and 2008 market crashes after they were raising rates. If things are stable, they probably will keep rates steady.... no need to cut.
sleepy5136
Well-known member
Irvine is flooded with FCB's with the majority being Asian buyers. It's quite crazy how many down payments I've seen that are 40%+ and I would argue it's quite close to 30-40% of them are putting that much down in Irvine. With that much down, you really aren't rate sensitive. Sure, they might be non-QM loans with adjustable rates but I don't think it really matters.
If anything, I'd be more concerned of US/China tensions flaring up and if it does get to a point of war, a lot of them might cash out.
Someone making a down payment, let alone one of only 40%, is by definition NOT a FCB as the C= CASH.
And how is anyone taking on a huge mortgage of 60% of a typical new Irvine pad not rate sensitive? ARMs aren’t that much lower than 30 FRM.
Your stats now have me even more convinced Irvine will suffer a serious adjustment which could be geopolitically related as you pointed out. I thought the FCBs paid cash!
sgip
Well-known member
One could argue that if tensions really flare between the PRC and US, many of the homes owned by FCB's will become owner occupied quickly rather than remaining rental units or cash laundering machines. I doubt there would be a "rush to the exits" if things go from bad to worse on the political stage. Who would buy that inventory at these current prices? Any real panic induced cashing out would require a 20-30 per ent price drop AND bagholders willing to suck up a great deal of risk in an uncertain point in time. Possible? Sure, anything is. Likely? I'm not so sure.