Uh... about those sub 4.0% 30 fixed rate comments of mine...


Well-known member
I was wrong.

Saw on our rate sheet - likely on many others today - a $417k max 3.75% 30 year fixed rate available. The "lock-able" price starts at 3.0 points for a 30 day lock (8/2/10, subject to change without notice. Some add ons for FICO, cash out, and property type may apply).

There had been the occasional off brand broker touting a 3.875% rate for the past two weeks, but at a heavy cost, usually over 4.0 points, or a 10 year ARM advertised as a 30 fixed.

So much for my theory that a sub 4.0%  30 fixed rate would be unobtainable.

On the flip side, the low rates really aren't driving new buyers into purchasing, nor sellers into moving up because prices still are under pressure. There isn't a land rush (not a refi rush for that matter) relative to what you would think there would be in a 4.25% or lower rate environment. Anyone recall going through the 2009 Refinance Boom-let? 6 months in Underwriting for a 4.x% rate. Today, it takes about 60 days to structure a refinance.

I think it's a bit scary not to have gigantic business going relative to expectations in a sub 4.5% market. It says quite a bit about the state of the economy and consumer perceptions. Sure, we're all busy, but not like in 2009. My guess is that if rates went to zero we'd still have a great number of buyers say "Meh.. I'll wait for prices to fall a bit more." A sentiment I cannot disagree with.

My .02c

Soylent Green Is People.

Holy sha-moley! If anyone has a sub $417k loan... they should jump on that.

3.0 points is hefty... so maybe you should clarify that a sub 4.0% fixed, zero point loan may be unobtainable.
3.0 points does seem like an awful lot, but I guess for people planning to stay a LONG time its not bad. 

I was splashing the original SGIP prediction around my circle, so I better start mentioning points.   

dont you always have to mention points?

isn't it possible to buy a 2% rate with enough points?

I always look at the zero point rate when I'm comparing

30 Fixed zero point loans hover around 4.375 to 4.250% today. The MBS investors know that any rate at 5.0% or higher is likely to be prepaid (AKA refinanced) and thus the rebates offered to lenders in the 4.5% rate range is pretty skinny. This means the market currently believes there isn't much worth in providing a rebate of significance for rates in the 4.5 to 5.0% range because of the likelyhood of the loan existing for 6 months or longer. To USCTMCPA's post some time back, we'll see sub 5% rates for some time. Perhaps 4.5% will become the new ceiling.

There is a floor to most rate sheets. Theoretically you could buy a sub 3% rate, but at some point the cost benefit ratio is so out of whack it doesn't pay to attempt this.

In 2005ish GreenPoint had a MEGA BUY DOWN program, 5.0 points or so to get a sub 5.0% rate - financed into the loan, or paid via a seller concession. At the time it was a neat trick. Today, not so.

My .02c

Soylent Green Is People.
Got to look at a few things. I'll PM you for details. Here's a general response for continuing readers.

Most lenders today are for a sub $417k rate in the 4.5% rate rate. This assumes a SFD and FICO score above 740. If the property is a condo, you add .125 to the rate. If your FICO is sub 720 you add .125 to rate. If you pull cash out - skys the limit on price adjustments. Also, just because the rate is costing you zero points, there are fees involved. Most lenders have about $1,500 in costs which includes the appraisal. Title, Escrow, and pay off demands run about $1,400 for a $417,000 loan.

Let's say you have a high FICO and a SFD with 20% equity. The rates generally fall to 4.50% -0- points, about $2,900 in fees, or 4.875% zero points, zero fees. With a $417,000 loan amount, the .375% rate differential is $1,500 or so per year of interest saved. I tell my clients that if they have the cash, or can finance the costs, paying fees with a 24 month break even is the smarter way to proceed.

My .02c

Soylent Green Is People
Thanks for the PM SGIP... but your post answered my question, it's a zero points zero fees so the 4.875% kind of jives with what Wells told us.

I will probably ask about paying down the rate... mucho gracias for the info you blunt instrument you.