This is a CRAZY time for everyone and for many reasons, but also especially in the mortgage industry. We’re experiencing crazy time mortgage rate lows.
I have had over 100 new loan requests in the last two weeks, which is 15 more loans than I closed all of last year, the third best year in my 25-year career!
Fed Rates at Recession Lows
Many of you are now aware that the Fed has just cut their target rate to 0% – .25%, which is where rates were for eight years during and post the Great Recession. Mortgage rates will eventually follow that trend. In addition, last Thursday, March 12th, the Fed injected $1.5 Trillion in liquidity into the markets. The Fed is purchasing $500 Billion of treasury bonds from the market as well as $200 Billion in Mortgage-Backed Securities.
Staffing & Money for Refinance Rush
In less panicked times, these moves would push mortgage rates lower but there are a couple of factors that have caused mortgage rates to increase over the last week. With a 500% increase in refinance applications, mortgage lenders don’t have the staffing to keep up with the volume.
Additionally, mortgage lenders are worried that with this historic increase in loan volume, they could run out of money to lend. Hopefully, the Fed’s move to inject liquidity and purchase mortgage-backed securities from the markets will alleviate the fears about running out of money to fund loans.
Working Around the Clock
As for staffing issues, I can attest that I have been working around the clock, literally 18 hours every day, for three weeks to try and service all my existing clients while not proactively reaching out to bring on new business. Not many people in my industry are as dedicated as I am, but many mortgage lenders are making staff work over the weekends as well as hiring like crazy. Even so, the turn times to get refinance mortgages approved and closed have ballooned.
How Long to Close?
Many wholesale mortgage lenders, those that work with brokers like me, are taking 45-60 days to close a refinance that would normally take 30 days or less. Customers of institutional retail lenders, including the large banks, will likely experience increase turn times to months, sometimes as much as four-to-six months to close a refinance. Purchase transactions will take priority but turn times on those loans will also stretch. Even then, with most Jumbo loans, quick purchase closings may not be possible in this market.
What This Means For You
► Look for historically low rates now, and expect them to continue for this year and possibly into or even through next year.
► If your situation is complicated, I am very good at and love complicated deals! Don’t hesitate to contact me. In your case, you may have to wait longer to hear back from me because those deals take a lot more time to work through.
► I promise to get to everyone as soon as humanly possible.
Thank you again for your continued patronage, support, and patience during this historic time.
Viral (pronounced like "virile") "Vic" Joshi is an independent California Home loan expert and licensed real estate agent who has been guiding home buyers through the mortgage loan process for over 20 years. Vic is an agent with the nationally licensed C2 Financial Corporation, offering preferred access to virtually any mortgage loan product available. He is a proud San Francisco Bay Area native, a certified Rescue Scuba Diver and a loyal Warriors fan. Learn more about Vic here or connect on LinkedIn.