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Buyer Beware of Discounted Rate Offers

Buyer Beware of Discounted Rate Offers

We are seeing some of the bigger banks and online institutions go on sale and offer heavily discounted rates to customers as of late.  This is actually typical when rates go up.  The companies that have a high concentration of refinance business look to capture as much volume as they can and are desperate to get it because a large percentage of their business (refinances) is down significantly.  The discount lures the buyer in.  The problem is they aren’t really wired to handle purchase business all that well, so it can result in a declined loan at an inopportune time.  I have personally received 4 loan files in just the past 4 days for clients that have been left at the altar by their discount lender.  We can help.  Don’t let your client get discouraged by being declined by a brand name or online lender.  


Financial Markets

The Dow Jones didn’t just breach the historic 20,000 point bench mark, it blew right by it without slowing down to say hello.  The Dow closed Friday at 20,624, up nearly 3,000 points from November 1, representing a 17% increase in just 3.5 months.  Cheers to opening your next 401K statement!

The Fannie Mae 3.5 mortgage backed security, which is housed in the bond market and is the instrument that 30 yr fixed mortgages are tethered to, is up 20 basis points from February 1.  When the price of the instrument itself goes up, the mortgage rate to the borrower goes down.  20 basis points is not even enough to move the 30 year fixed mortgage .125%...Typically it takes a 50 basis point move in this instrument for the consumer to see an improvement of .125% to the consumer’s rate. 

That said it has been “choppy” and particularly difficult to time predicting when the best time to lock in a rate would be.  The Fannie Mae 3.5 coupon reached as high as 102.9 (which would result in .25% better rate from 102) on around February 8, then just 3 trading days later, drops to 101.8, only to bounce back to around 102.2.  Basically the 30 year fixed went down .25% in a matter of a week, then up .375% over the following 3 days, then back down .25% by the end of the week…YOLO…You only lock once…



Southern Nevada Real Estate Related Data

A great article in the RJ regarding Southern Nevada’s housing appreciation in 2016.  The data illustrates that the best appreciation rates occurred in older areas of Las Vegas.  The median price of a single family residence closed out the year at $238,000.  This marks over 100% appreciation since the low of around $110,000 in 2012 but still down 25% the peak of $315,000 in 2006.  So are we headed for a bubble? 

The median priced single family residence home in 2000 was around $142,000.  Generally speaking, 2000, would be considered a normal, healthy housing market…before housing shot to the moon and back.  If you compare the current median priced home from then to now, it is up 67% over 16 years, which is roughly 4% per year.  Considering the population growth of Southern Nevada I would consider the current state of home prices to be about right.