Please keep in mind layered risk pricing for all loan products for credit score and loan to value mixes.  Call for quotes.

 

Blow after blow struck the bond market this week resulting in a huge sell off of every type of bond: treasury, municipal, mortgage backed, corporate, bonds got hammered with increasing strength from last Thursday through yesterday.  Thankfully the blows slackened a bit today and we get a rest on Monday with the markets closed for President's Day.  At the end of the week we are left looking at the carnage and the result is the biggest one week jump in conforming rates since the beginning of June.

 

I will not get into the details but generally speaking the rate markets have put the four to five week low rate period we had in the rearview window, whether we revisit the lows again in the near future is unknown at this point.  Certainly the underlying sentiment and conventional wisdom of the media and those labelled experts is we should have lower rates if we are entering economic downturn--but until consistent economic data shows evidence of week after week and more than one month of very slow or no growth numbers investors will maintain the bond prices and rates in the range from the end of December, somewhere around 5.75%.

 

Those on this communication who have been reading my thoughts and comments on the market and industry for several years will know my stance has always been: lock in as soon as you can through the close of escrow.  This past week has very much validated my position and approach to working with clients.  Anyone who entered last Thursday playing the market and each day waiting for rates to go back down to where they were at the end of January is regreting that approach.  Anyone who locked in on any day in the past week should be very glad they did so as it most likely saved them rates and/points being higher. 

 

My advice, my mantra if you will:  LOCK RATES, TERMS AND FEES WHEN OPENING ESCROW. 

 

Often clients will say, "what if rates go down..."  My standard response is that if it is a generic product and we have time we can usually switch the loan to another lender and take advantage of the drop in rate, if they have a non-generic product then I advise them to lock and be safe rather than take the risk.  My analogy is that while I like to go to Las Vegas and spend some time at the blackjack tables, I certainly do not bring my mortgage payment with me and neither should they gamble with their mortgage payment.  Using the same analogy, if I am winning I generally know when to stop and walk away; sure I might win some more but I would rather take my $400 and walk and risk not winning another $50 than stay at the table a while longer and only walk away with $300, or worse.  Do not gamble or risk your mortgage payment.  When the rate and terms are available through your escrow period and you qualify and are comfortable with those numbers (and you should be because you were qualified and pre-approved using them) then lock in the loan.

 

I will get off my soapbox now....

 

Both Jumbo and Conventional got hit this week, although the increase in conventional is higher with an increase of 0.375% from last Friday presenting a rather unusual curve in the chart below.

 

NOTE PRICING BELOW IS BASED ON 15% DOWN FOR JUMBO LOANS AND 10% DOWN FOR CONFORMING, FULL DOC, AND FICOS OF 720 AND ABOVE:

 

 

The market is still volatile, we are still seeing lenders with fungible guidelines and products, so make sure you and your clients are very diligent in communicating to everyone in the transaction. 

 

I would appreciate it if you could pass my name on to someone who needs mortgage information this week, or send me their name and contact information and I am happy to see how I can be of service.  Thank you!

 

Please feel free to forward this email to your co-workers and clients--or send them to my Mortgage Blog where it is posted weekly.

 

Have a great weekend,

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