The Real Deal With Rates! (What the News Doesn't Know)

By
Mortgage and Lending with Tampa Bay Florida FHA, VA, USDA & Jumbo Mortgages NMLS#237468

While the news reports all time low interest rates because of market indicators and market conditions, rates continue to rise...why is this?

Well the Bottom line is, lenders and wholesalers alike are swamped. Over the past 24 months, operations staffs have been cut tremendously. Two wholesale lenders alone have generated $750MM and $458MM of locked loans in less than 24 hours.

A lot of these locks were registered for 30 days. Let's face it, there is only so many loans that can be originated, processed and funded in a given time with a limited number of bodies.

As some lenders have already initiated HVCC guides, turn times have only gotten worse and risk falls on the investor for locked loans that do not close.

If you are a lender and are faced with the decision to accept more locked loans that cost you anywhere from 0.25-0.50% if they are not funded, you simply ramp up rates to thwart off increased volume.

Taking a look at the MMG Bond Quotes page shows that the FNMA 30 Yr 60 day yield is 4.24% today. Under normal conditions, this would bring rates around 4.625%. However, in the St. Petersburg area today, rates are around 5.125% without paying points.

At the very least it is frustrating for all of us in the markets because we can not offer the rates that should be available until the volume of loans slows to the point that investors want to increase their loan intake again.

I read elsewhere that Chase retail is charging borrowers .50% to lock and that they will not accept less than 70 day locks on refi's. At least this is what someone stated. Perhaps a Chase LO could comment here to either validate or dispute.

Posted by

Joshua LeretteAn experienced mortgage industry professional, Joshua Lerette has helped home owners and potential home buyers across the country purchase andrefinance their homes for over 11 years. Based in Tampa, FL, Joshua Lerette is an well known expert in the industry and extremely well versed in mortgage products available to potential clients including FHA Loans, VA Loans, USDA Loans, Fannie Mae and Freddie Mac home mortgage loans as well as Jumbo Loans to help potential home buyers and home owners either purchase or refinance.

 
 
 
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Rainer
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Stephen Graham
Inactive - Atlanta, GA

It's good to read about the inner workings of the mortgage industry. It's all about supply and demand, too.

January 16, 2009 11:37 AM #1
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Jerry Becker
Jerry Becker and Associates - Littleton, CO
Littleton, Colorado

Thanks for the insights.  What are you feelings about the lack of aid for PMI companies?  I feel the government could do more to stimulate housing sales if they would inject money into these companies.  It's real difficult dealing with them on a non-FHA loan.  They've sustained such huge losses they seem to be crippled.

January 16, 2009 11:49 AM #2
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