Hello Friends, Iam back from my travels and just in the nick of time as Brexit sparked a flight to the U.S. bond market that caused mortgage interest rates to fall to the lowest level I have ever seen on July 5th. One day before my flight back from Europe the news of Brexit hit. Ironically, I was in Athens, Greece when the news broke on Friday June 24th and I flew back home the next day. I could see the impact that Brexit had on the bond market with the 10-year treasury bond yield starting to float downwards on its way to hitting a historic low of 1.32% on July 5th. For the next three weeks, I was working almost every waking moment to keep up with the increasing loan volume.
Nationwide, the week of July 4th saw mortgage applications increase by over 100% from the same week in 2015. My volume alone went up three times. Rates stayed at that record low level for July 5th and then rates started rising from there. By the time we hit July 12th most mortgage rates had gone up by .25%. The lowest no point and no fee refinances I have ever locked were on July 5th and 6th with conforming
(Continued from front page) interest rates for 30-year fixed at 3.25% APR. The 15-year fixed, no-cost refinance was at 2.625% APR! I am still buried under a huge amount of activity, but the first and second waves have been weathered and we are able to take on more business. Even coming up off of the lows from July 5th, mortgage rates stayed close to the previous 50-year low interest rates last seen in 2012, so there is still an opportunity to capture a historically low interest rate for refinances and purchases. I think we have a chance for this general low rate environment to last until after the election in November. The Federal Reserve is unlikely to try another rate hike until December of this year and maybe even not then if economic uncertainty continues both at home and abroad.
Lenders are all backed up again as is the case every time interest rates drop to new record low levels. Every lender we work with is taking around 45 days to complete a mortgage refinance right now with purchase transactions still taking priority. Closing escrow on a home purchase that requires a mortgage will likely take a minimum of 30 days, even with prioritization given to purchases because every phase of loan processing is getting delayed.
Since I have so many lenders available to choose from, around 100 or so, I am able to find the lenders who are pricing aggressively while others are at capacity and have increased their rate offerings to slow down new loan volume. Appraisers are so inundated that many of them are turning down new appraisal orders and it can take two weeks or more to get an appraisal back. We have had to throw extra money at appraisers just to get them to take some of our appraisal orders.
The media is always a week late to the party with The New York Times putting the rate drop on their front page a week after the drop had happened. I tried reaching out to clients in the last week of June and was able to be proactive for that one week. After that, I have just been keeping up with the inbound refinance requests. If your interest rate is at or over 4%, this is definitely the time to look into the possibility of refinancing. Even if your rate is below 4%, it may be time to look into reducing your rate further or shifting to a shorter term loan, like 15-year fixed, to get to an ever lower rate below 3%. Dropping the rate is good, but the real value of refinancing is to reduce your monthly mortgage liability and reinvest the cash flow generated by paying into the principal on your mortgage or into another type of investment that can grow that money over time. I give free consultations and I can help analyze in a short period of time whether or not it makes sense for you to refinance.