Let’s talk about mortgage rates for a moment.
My understanding is that despite the Citibank earnings that came out yesterday, mortgage originations are way down, 71% from a year ago.
It sounds like originations across other major lenders, like Wells Fargo, are
far down as well.
Some data about mortgage originations across the US
A thought
– make sure you hire a mortgage broker who won’t be fired tomorrow!
I have plenty of recommendations for you.
Rates remain remarkably low.
Per Wells Fargo’s rate sheet yesterday, a 30-year fixed Jumbo loan (over $417,000) is being offered at 4%!!
A 15-year fixed is at 3.5%, and the shorter-term, interest-only products are competitive, as well.
Borrowing above the current conforming limits seems to offer the best rates out there, right now, on fixed products and interest-only products, where only a conforming-limit interest-only product is lower (3.25%)
than the Jumbo loan (3.375%) on a 7-year time frame.
That is –
borrow as much as you can while the getting is still good.
What’s changed? Why is the lending pace slower right now?
Simply put, borrowing is less available to buyers outside of NYC, or with credit scores lower than 740.
If you’re a high earner with great credit, as most buyers here are, line and up and enjoy the historically low rates!
However, a bulk of buyers who want to refinance their homes or perhaps participate in the wild bidding wars across the country may not have high enough credit scores.
Sure, it’s tough news for many first-time buyers who haven’t eliminated dings in their credit.
Perhaps we all
should be investing in credit repair businesses.
Money is piling into lower Loan-To-Value loans, with buyers putting 25% or more into their home purchases, and these loans increasingly are going to buyers with great credit – where the risk is lower, as long as money continues to be cheap for banks to use.
Sounds pretty obvious.
As inventory stays low across the nation, with fewer housing starts and more rental properties being built in areas where land is affordable, we may see homeownership flatten out a bit both in and out of NYC.
Rates are still 2-3 percentage points lower than they were in 2007, which has pushed prices to new highs.
In effect, rates are down nearly 1/3!
This purchasing power has impacted our market in an outsized way, given the strong buyer profile.
It would seem that tuning out the noise of broader US banking news may be in order, as it relates to mortgage businesses,
since money piles into the strongest buyers and markets.