Mortgage rates are falling and everything has suddenly changed – for now
“For example, I took out one loan today that would have cost the borrower 1.213 points on Monday, compared to 0.375 today. This loan amount happens to be $610,000, and the cost of the rate went from $7,400 to $3,200 today,” Hoff said. “The average mortgage amount in the US is $405,000, and an additional 80 basis points in savings could amount to $150 to $250 per month depending on the overall scenario. This is huge for borrowers.”
According to Hoff, the borrowers who will benefit from these rates are those who purchased or closed a cash-out refinance within the last twelve to eighteen months. Additionally, some borrowers are looking to buy now or have been prequalified within the past year.
“They may benefit from a lower payment or even qualify for a higher purchase price if the DTI was a key factor in the pre-approval,” she said.
Hoff has already advised her clients about “rate alerts” to “get the ball rolling now so they can be prepared when the rate reaches the benefit level.”
Looking ahead, she thinks interest rates will be volatile and “skip everything, just like the stock market.”
“When interest rates fall sharply, we usually see a correction the following week,” Hoff said. “I hope this is not the case, but I have let my clients know that this is why I took out three loans today.”
Reducing reimbursements for VA borrowers
Patton Gade, the national director of military lending at UMortgage, said he believes the market has already priced in a September rate hike. He does not make the rates as low as possible, but piles the fees on top or structures refis to eat up the equity.
“Some will shine with a 5.2% rate, but they charge a full point on the origination fee and two discount points,” Gade said. “I believe the best way to care for the veteran is with a loan with little to no fees. The lowest rate for the lowest possible costs, that is the direction I want to go.”
Looking ahead, he doesn’t expect rates to continue falling into the low 6s and beyond.
“You can’t bet your life or your client’s financial future on what we think will happen in the next six, twelve or eighteen months. Things happen that are unexpected,” Gade said.
Daniel Sa, division president at NFM loans, said he has been proactive in communicating with previous clients about how they can benefit from refinances. He tells customers they can refinance with no lender fees and receive an appraisal fee.
“Given the recent positive shifts in the mortgage rate environment, we believe that the coming months, especially between September and December, will be the optimal time for our customers to refinance,” said Sa.
“For new customers, we are currently offering competitive rates that reflect both current market conditions of 6.375% to 6.750% and our expectation of further rate reductions,” he said. “This strategic positioning is intended to ensure that our customers not only benefit from potential interest rate cuts, but are also well informed and prepared to act quickly to optimize their mortgage terms.
“Our goal is to keep our customers top of mind, maximize their financial benefits and increase their overall satisfaction with our services.”
