As most of you already know by now, the stock market has plummeted and treasuries have dropped to the lowest in history, as of the time of this writing. The trigger has been the concern over the global economic impact of the Coronavirus. In truth, it is extremely premature to know what kind of a financial impact the virus may have, so much of the reaction, or over-reaction is not based on market fundamentals.
One thing that is fundamentally certain is that the yields on the 10-year U.S. treasury have dropped beneath 1.325, the lowest on record. Mortgage rates, which often move in correlation to bond yields have been dropping on the movement as well. The Mortgage Bankers Association reported that mortgage application volume was up 15% last week. Applications to purchase a home were up 6.0%, and refinances are now up 152% year over year.
As I am sure is happening elsewhere, we are busy with calls and inquiries about refinancing options, and to find out the best available rates and terms. While this might sound strange coming from someone who makes their living by giving people mortgages, I have been very open and honest – and patient – with those who I have spoken to in terms of maximizing their best rates and options.
Doing a mortgage strictly to save a few dollars a month now might be financially beneficial, but it prevents someone from truly getting the best “long term rate” if rates dropped a bit more. Very often it is about getting the best available rate today at the given moment, but also anticipating what might be the most cost-effective way to reallocate their mortgage financing.
That said, while I do anticipate that we have not yet seen the “bottom” of mortgage rates, I do believe that the best advice that I can offer someone is to do their homework. Yes, it’s important to shop for the best rate and lowest fees, but its also as important to speak with someone who understands the mechanics of the mortgage market and can give you the best advice that pertains to your specific circumstances and goals.
Not to belittle anyone in this industry, but there are too many people “out there” that merely act as “order takers” to quote a rate and seal the deal. I have several clients who benefited by saving tens of thousands of dollars because they heeded my advice and waited without being pressured by others to lock in the rates.
My advice is to be mindful of whom you speak to and truly what they have to say. Not everyone speaks “fluent mortgage” in today’s environment.
Special shout out to my team, Israel, Bonnie, Elliot, Lisa, Erin and all the others who have been doing a great job with our events and busy environment.
Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected].
