sleepy5136
Well-known member
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How low can we go? 30 yr fixed at 3.75% with no fees...
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usctrojancpa
Well-known member
My 3 refi loans funded today...what a journey of almost 3 months. It's not fun being a self-employed borrower but I'm done refinancing these 3 properties. haha
usctrojancpa
Well-known member
Cares said:
One of my clients is a refi lender at Loan Depot so he hooked me up. Part of the delay was me having to pay off and close my PenFed CU HELOC and it took them about 5 weeks to record the reconveyance after it was paid in full and closed. You want a shot at my $2m jumbo loan purchase loan? I'm getting rate quotes in the mid-to-high 2s with the bigger banks.
I can take a look for your jumbo but markets aren't doing too hot.
Holy Jesus. Another -50 bps this morning. We're 250 bps down from 1 week ago for mortgage bonds. For most best case scenario purchase loans, we're around 3% and if lenders reprice then I think we certainly will be over 3%.
Holy Jesus. Another -50 bps this morning. We're 250 bps down from 1 week ago for mortgage bonds. For most best case scenario purchase loans, we're around 3% and if lenders reprice then I think we certainly will be over 3%.
sgip
Well-known member
It's looking like in the short run at least there will likely be a resurgence of ARM product use for purchase loans. This happens every time there is a fixed rate spike. The difference this time is that a low 3% to upper 2% fixed rate is going to be the very bottom for a fixed rate in many cases. Will paying points to get a sub 3% rate become normalized, just to ensure that super low rate is locked in stone? Possible this go round in the market.
If ARMS become the mortgage of choice, at what spread will buyers leap into the product? Example - if the FIXED/ARM rate difference is .375, an $800,000 mortgage payment difference is $160 per month, $13,440 in 7 years, or $19,200 in 10 years. Is that a wide enough differential for buyers to then opt for ARM loans thinking "I can always refinance if rates come down"? (Pro Tip: No, you cannot "always refinance". It's a gamble) For every .125 in spread on an $800k loan, it's $53 per month. Does it mean then that a .50, .625, or .75 rate difference would attract buyers to ARM loans?
What would you say is the tipping point?
If ARMS become the mortgage of choice, at what spread will buyers leap into the product? Example - if the FIXED/ARM rate difference is .375, an $800,000 mortgage payment difference is $160 per month, $13,440 in 7 years, or $19,200 in 10 years. Is that a wide enough differential for buyers to then opt for ARM loans thinking "I can always refinance if rates come down"? (Pro Tip: No, you cannot "always refinance". It's a gamble) For every .125 in spread on an $800k loan, it's $53 per month. Does it mean then that a .50, .625, or .75 rate difference would attract buyers to ARM loans?
What would you say is the tipping point?
usctrojancpa
Well-known member
Soylent Green Is People said:
I would typically tell my buyers if they are not getting at least about a 1/2% benefit from a 7 or 10 year ARM loan vs 30 year fixed then it's not worth it getting the ARM loan. That being said, if the buyer and I are confident that they won't own the home beyond 7-10 years then an ARM loan makes a lot of sense. I've had several buyers who ended up selling their homes in 2-5 years and kicked themselves for not going with a lower ARM rate loan.
sgip
Well-known member
PS - if you were planning on funding today, I'd say it's going to be difficult. The Fed Wire system and the ability to ACH are currently down. This is especially impactful if you have a property transaction in a county that does not special record.
Hedge accordingly!
Update 12:45 PST. The Fed is back in business (for now!)
Hedge accordingly!
Update 12:45 PST. The Fed is back in business (for now!)
paperboyNC
New member
When I got my first 7yr ARM, it 3% for the ARM and 4% for the fixed.
Rough opening for bond markets again this morning. Down 63 bps. I think we're likely going to switch over to the 2.5 for current coupon soon meaning 3%+ rates.
Edit: Now it's down 105 bps and sub 100 for the 2.0 coupon. This is bad for business. Yikes we're all the way back to April 2020 bond rates. This blood bath really isn't letting up.
Edit: Now it's down 105 bps and sub 100 for the 2.0 coupon. This is bad for business. Yikes we're all the way back to April 2020 bond rates. This blood bath really isn't letting up.
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usctrojancpa
Well-known member
Refi business will keep drying up as rates continue to increase, but I'm curious how buyers will react once they see a 3 for their interest rate versus a 2 on their loan preapproval to purchase.
Buyers and borrowers both are asking me if they should wait to buy a home because housing prices have not "adjusted" to increased interest rates yet.
I think the housing market is still hot and in good shape. Increased purchase interest rates is only going to thin out the field but there was so much competition previously. Inventory is still lacking so I don't really see interest rates having a major impact on prices.
I think the housing market is still hot and in good shape. Increased purchase interest rates is only going to thin out the field but there was so much competition previously. Inventory is still lacking so I don't really see interest rates having a major impact on prices.
sgip
Well-known member
Smart listing Agents will see a 2 handle pre-approval letter and ask for an updated one at 3+. That's what happened last spike in rates.
An $822k loan at 3.0 vs 2.75 is around a $110 per month higher payment. Everyone wants to pay less, but that slight of a change won't stop too many buyers.
Mostly this new rate environment will put a stake in the heart of the exclusively structured call center refi shops.
My .02c
An $822k loan at 3.0 vs 2.75 is around a $110 per month higher payment. Everyone wants to pay less, but that slight of a change won't stop too many buyers.
Mostly this new rate environment will put a stake in the heart of the exclusively structured call center refi shops.
My .02c
usctrojancpa
Well-known member
Cares said:
Yeah, it'll only decrease demand on the margin as people are priced out and others wait for an adjustment to prices for the higher rates. One issue is that prices can be very sticky on the way down as comps always lag (i.e. we see homes that got into contract a month ago start closing now).
usctrojancpa
Well-known member
Soylent Green Is People said:
We knew rates were going to rise as soon as Owning was sold, that owner has impeccable timing on knowing when to pull the ripcord and exit.
usctrojancpa
Well-known member
Cares said:
Yeah, until they see the GFE and ask WTF is that $10k-$20k costs in points. haha