What Are You Going To Do With Higher Interest Rates???
How
to handle those who are waiting for rates to go back
down...This isn't easy to say,
but it must be said - rates are NOT going back down (at least not
significantly). Rates being quoted right now range from the 4.75% area to above
5%, based on lender, consumer profile (credit score, program, money down, etc),
and the day. When I say "the day", I'm not being flippant - there really is
such nauseating volatility that we are seeing rates jump by as much as .25% in
interest rate in a single day.
With the drastic and dramatic jump we've seen since May 3rd, consumers may have thrown the brakes on for looking at houses - waiting for rates to come back down. It is important that you are able to work closely with your favorite Mortgage Loan Originator to convince the consumer of two things:
1) Rates are NOT going back down into the 3's, or probably much (if any) below 4.5%.
2) They must continue their search now before home prices continue to go up along with the higher rates, further eroding their buying power.
This is a difficult conversation, and an even more difficult sale - but it is easier if you work in tandem to educate the consumer so they understand why these facts are true and are able to move past the negative emotions involved and get back in the saddle of finding that new home. You see, when rates move as drastically as they have recently, consumers are going to follow the Kubler-Ross Grief Model (Denial, Anger, Bargaining, Depression, Acceptance) before they are ready to move forward. You can be a big part of helping them deal with the emotional baggage and take advantage of what are still fantastic interest rates and a great time to buy a new home!
Last Week's Mortgage Rates Recap
Last week was nothing less than tragic for mortgage rates - as we forecasted. The Fed has spooked the markets with concern that the end of QE3 is on the horizon, and no matter what they continue to say it isn't herding the bears back into the cage. Normally MBS (Mortgage Backed Securities) would have benefited from the huge sell off seen in the stock market - but this last week was anything but normal. We saw MBS sell off over 300 basis points, which means we saw consumer rates increase an average of .625% in a single week (meaning a consumer who started the week with a quote of 4.125% ended the week with a quote of 4.75%). We hope that anyone that was able to lock in their interest rate was listening to the last few weeks of market activity and was able to lock in better rates. The bad news is that barring unforeseen market shaking news, we may pick a little bit of that rate hike back up in better interest rates over the next few weeks, but any retracement we do see is likely to be small (most consumers will not see average rates below 4.5% for conventional 30 year fixed mortgages).
This Week's Mortgage Rates Forecast
Mortgage Rates Currently Trending: HIGHER
This week has opened carrying the same momentum as last week, opening up with a huge loss in MBS this morning, and seeing rates already on the rise. There isn't much in the way of economic news that is getting reported this week that could spark a turn around, so expect the current bearish market to continue.
With the drastic and dramatic jump we've seen since May 3rd, consumers may have thrown the brakes on for looking at houses - waiting for rates to come back down. It is important that you are able to work closely with your favorite Mortgage Loan Originator to convince the consumer of two things:
1) Rates are NOT going back down into the 3's, or probably much (if any) below 4.5%.
2) They must continue their search now before home prices continue to go up along with the higher rates, further eroding their buying power.
This is a difficult conversation, and an even more difficult sale - but it is easier if you work in tandem to educate the consumer so they understand why these facts are true and are able to move past the negative emotions involved and get back in the saddle of finding that new home. You see, when rates move as drastically as they have recently, consumers are going to follow the Kubler-Ross Grief Model (Denial, Anger, Bargaining, Depression, Acceptance) before they are ready to move forward. You can be a big part of helping them deal with the emotional baggage and take advantage of what are still fantastic interest rates and a great time to buy a new home!
Last Week's Mortgage Rates Recap
Last week was nothing less than tragic for mortgage rates - as we forecasted. The Fed has spooked the markets with concern that the end of QE3 is on the horizon, and no matter what they continue to say it isn't herding the bears back into the cage. Normally MBS (Mortgage Backed Securities) would have benefited from the huge sell off seen in the stock market - but this last week was anything but normal. We saw MBS sell off over 300 basis points, which means we saw consumer rates increase an average of .625% in a single week (meaning a consumer who started the week with a quote of 4.125% ended the week with a quote of 4.75%). We hope that anyone that was able to lock in their interest rate was listening to the last few weeks of market activity and was able to lock in better rates. The bad news is that barring unforeseen market shaking news, we may pick a little bit of that rate hike back up in better interest rates over the next few weeks, but any retracement we do see is likely to be small (most consumers will not see average rates below 4.5% for conventional 30 year fixed mortgages).
This Week's Mortgage Rates Forecast
Mortgage Rates Currently Trending: HIGHER
This week has opened carrying the same momentum as last week, opening up with a huge loss in MBS this morning, and seeing rates already on the rise. There isn't much in the way of economic news that is getting reported this week that could spark a turn around, so expect the current bearish market to continue.
Comments
Post a Comment