How low can we go? 30 yr fixed at 3.75% with no fees...

NEW -> Contingent Buyer Assistance Program
What does "limited options of homes for sale" mean to you, LL?

No one is claiming that rising rate doesn't affect buyers, but it's NOT the only cause. Low inventory also plays a role. Remember that there are also cash buyers. So now we see more cash buyers. As are result, purchase mortgages will decrease as well. The point is, there are MANY factors.
 
Congratulations!  We've just experienced the fastest increase in mortgage rates of all time.... and it's just getting started!!! 

What happens when the Fed starts to shrink it's balance sheet next month?  #CherryPicking #BrokenClock

usk7lp44aaw81.png
 
It is shocking how fast things have changed.

30yr Fixed Mortgage Rates Now Over 5.5%

The hits keep coming for mortgage rates in 2022.  Not since the early 80s have rates risen as quickly as they have in the past 2 months (or the past 4 months for that matter).  Less than 6 months ago, some lenders were still quoting top tier conforming 30yr fixed rates just under 3%.  As recently as early March, those same rates were still in the high 3's at times.  Now today, the average lender is easily over 5.5%.
https://www.mortgagenewsdaily.com/markets/mortgage-rates-05022022
 
LL is quoting conforming rates.  Jumbo 30 year rates are still in the low 4% range and given where prices are in Irvine most people are getting Jumbo loans. 
 
These discussions need to bifurcate between Conforming / High Balance Conforming, and Bank Jumbo Portfolio. Pricing still isn't too bad for Jumbo fixed.

ARM products are not "popular" per-se, but the choice of last resort for many. Banks and Agencies don't want ARM products in the face of rising Fed Funds and other ARM indexes. With the 6 month SOFR index around .106, and most Margins at 2.25, you'd think ARM's would run around 3.5 or so, but many ARM start rates are very high 3's, low 4's.

ARM's are still stigmatized by what happened in 2006-2009, but also due to the recent low rate environment. There is a strong pushback on ARM products. Some of the reasons? "Oh... my friend/co-worker/neighbor/(insert pronoun here) got a 2.75% 30 year fixed rate. I'm kicking myself for not acting sooner. Take an ARM that won't adjust for a decade? No Way! It could go up to thirty-teen some day. I'll stick with a 5.5% fixed rate" instead of a 4 percent ARM. Besides, I was told "you can always refinance". Blegh. Yes, a refi opportunity may come along. The view should be "possible" but not "always".

Few people standing around the BBQ of their new home like to tell their friends about what a great low ARM rate they got - even though it may be a wise way to buy. Fewer still are comfortable explaining to their in-laws why they took an ARM versus a fixed rate. I've heard these and other reasons from the very lips of buyers in the past 90 days. History, as it's been said, is a circle. 

At this time the idea of a long term rate environment reset, even a medium term purchase price reset, hasn't yet imbedded within the collective buyer mindset - but these things are coming - hedge accordingly.

My .02c
 
USCTrojanCPA said:
LL is quoting conforming rates.  Jumbo 30 year rates are still in the low 4% range and given where prices are in Irvine most people are getting Jumbo loans.
Click to expand...

Haha... Yes, that's right.  Banks have ample liquidity, so they are offering rates for less than conforming and 0.001% on your savings accounts.  Smoke 'em while you got 'em.
 
Liar Loan said:
USCTrojanCPA said:
LL is quoting conforming rates.  Jumbo 30 year rates are still in the low 4% range and given where prices are in Irvine most people are getting Jumbo loans.
Click to expand...

Haha... Yes, that's right.  Banks have ample liquidity, so they are offering rates for less than conforming and 0.001% on your savings accounts.  Smoke 'em while you got 'em.
Click to expand...

Conforming rates are based upon the MBS market which is getting crushed my sellers dumping their holdings ahead of the FED so it's way more volatile than Jumbo rate prices which is based more on the cost of capital for lenders (mainly big money center banks with strong balance sheets).
 
Soylent Green Is People said:
ARM's are still stigmatized by what happened in 2006-2009, but also due to the recent low rate environment. There is a strong pushback on ARM products. Some of the reasons? "Oh... my friend/co-worker/neighbor/(insert pronoun here) got a 2.75% 30 year fixed rate. I'm kicking myself for not acting sooner. Take an ARM that won't adjust for a decade? No Way! It could go up to thirty-teen some day. I'll stick with a 5.5% fixed rate" instead of a 4 percent ARM. Besides, I was told "you can always refinance". Blegh. Yes, a refi opportunity may come along. The view should be "possible" but not "always".
Click to expand...

"You can always refinance" should be a pro for ARM, not a con. Correct or not, everyone is expecting a recession by end of 2023 or 2024 at the latest, at which point the Fed will have to start cutting rates again. That's two years out. Don't you think that 3 years of recession, the rates would have come back down to something reasonable enough for a 30-year fixed? Like sub 4%? So, in the next 5 years, why would you want to stick with 5.5% instead of 4%?
 
Soylent Green Is People said:
These discussions need to bifurcate between Conforming / High Balance Conforming, and Bank Jumbo Portfolio. Pricing still isn't too bad for Jumbo fixed.

ARM products are not "popular" per-se, but the choice of last resort for many. Banks and Agencies don't want ARM products in the face of rising Fed Funds and other ARM indexes. With the 6 month SOFR index around .106, and most Margins at 2.25, you'd think ARM's would run around 3.5 or so, but many ARM start rates are very high 3's, low 4's.

ARM's are still stigmatized by what happened in 2006-2009, but also due to the recent low rate environment. There is a strong pushback on ARM products. Some of the reasons? "Oh... my friend/co-worker/neighbor/(insert pronoun here) got a 2.75% 30 year fixed rate. I'm kicking myself for not acting sooner. Take an ARM that won't adjust for a decade? No Way! It could go up to thirty-teen some day. I'll stick with a 5.5% fixed rate" instead of a 4 percent ARM. Besides, I was told "you can always refinance". Blegh. Yes, a refi opportunity may come along. The view should be "possible" but not "always".

Few people standing around the BBQ of their new home like to tell their friends about what a great low ARM rate they got - even though it may be a wise way to buy. Fewer still are comfortable explaining to their in-laws why they took an ARM versus a fixed rate. I've heard these and other reasons from the very lips of buyers in the past 90 days. History, as it's been said, is a circle. 

At this time the idea of a long term rate environment reset, even a medium term purchase price reset, hasn't yet imbedded within the collective buyer mindset - but these things are coming - hedge accordingly.

My .02c
Click to expand...

A smart buyer will use the product that best suits them and the environment. A not-so-knowledgeable one will go where the broker points them.

That's why it's good to use someone who will help you rather than just sell you... especially when rates are rising.

Don't let Liar Loan headlines scare you from buying a home you like... trust someone like SGIP to help you find something that fits your affordability and situation.
 
@CalBears96

The overused "Well, you can always refinance" was  lenders "go to" answer while selling Option ARM products, 2/28ts, and other potentially lethal mortgage products during the 2005-2007 boom years.

In retrospect, the phrase was true, until it wasn't in 2008-2010. Lending seized up, only Agency loans could be refinanced using HARP loan products, and if your loan mod wasn't approved after 12 months of negotiation, a BK was looking ahead of you.

Vast numbers of decent people lost their homes because shaitty LO's had that easy to grasp all covering answer to ARM objections. That's why I cringe every time I hear it uttered. Yes, an opportunity may come along, but buyers need to be ready if it doesn't.

My .02c
 
CalBears96 said:
Soylent Green Is People said:
ARM's are still stigmatized by what happened in 2006-2009, but also due to the recent low rate environment. There is a strong pushback on ARM products. Some of the reasons? "Oh... my friend/co-worker/neighbor/(insert pronoun here) got a 2.75% 30 year fixed rate. I'm kicking myself for not acting sooner. Take an ARM that won't adjust for a decade? No Way! It could go up to thirty-teen some day. I'll stick with a 5.5% fixed rate" instead of a 4 percent ARM. Besides, I was told "you can always refinance". Blegh. Yes, a refi opportunity may come along. The view should be "possible" but not "always".
Click to expand...

"You can always refinance" should be a pro for ARM, not a con. Correct or not, everyone is expecting a recession by end of 2023 or 2024 at the latest, at which point the Fed will have to start cutting rates again. That's two years out. Don't you think that 3 years of recession, the rates would have come back down to something reasonable enough for a 30-year fixed? Like sub 4%? So, in the next 5 years, why would you want to stick with 5.5% instead of 4%?
Click to expand...

Dude - are you serious? You do realize inflation is at a 40 yr high and the Fed has no prior history of balance sheet runoff to the magnitude we're about to see. Get ready for a 7-8% conforming rate and a recession within 1 year. New buyers will get to experience what my parents did buying in Irvine in 89 - underwater for 8-9 years.
 
Soylent Green Is People said:
@CalBears96

The overused "Well, you can always refinance" was  lenders "go to" answer while selling Option ARM products, 2/28ts, and other potentially lethal mortgage products during the 2005-2007 boom years.

In retrospect, the phrase was true, until it wasn't in 2008-2010. Lending seized up, only Agency loans could be refinanced using HARP loan products, and if your loan mod wasn't approved after 12 months of negotiation, a BK was looking ahead of you.

Vast numbers of decent people lost their homes because shaitty LO's had that easy to grasp all covering answer to ARM objections. That's why I cringe every time I hear it uttered. Yes, an opportunity may come along, but buyers need to be ready if it doesn't.

My .02c
Click to expand...

I would argue that was the lenders' fault for 2 reasons: (1) lending to anyone, whether or not the buyer actually qualified, and (2) pushed for the 3-year ARM.

I bought at the end of 2005 and did 7-year ARM (in retrospect, 5 years would have been better), and by the time it started floating in 2012, LIBOR was really low, so my rates have been low since. LIBOR took a dump in 2009, so if borrowers' rate didn't float until then, they would have been fine. The problem was with borrowers whose rates started floating in 2007. Even 2008 wasn't so bad.
 
OCtoSV said:
CalBears96 said:
Soylent Green Is People said:
ARM's are still stigmatized by what happened in 2006-2009, but also due to the recent low rate environment. There is a strong pushback on ARM products. Some of the reasons? "Oh... my friend/co-worker/neighbor/(insert pronoun here) got a 2.75% 30 year fixed rate. I'm kicking myself for not acting sooner. Take an ARM that won't adjust for a decade? No Way! It could go up to thirty-teen some day. I'll stick with a 5.5% fixed rate" instead of a 4 percent ARM. Besides, I was told "you can always refinance". Blegh. Yes, a refi opportunity may come along. The view should be "possible" but not "always".
Click to expand...

"You can always refinance" should be a pro for ARM, not a con. Correct or not, everyone is expecting a recession by end of 2023 or 2024 at the latest, at which point the Fed will have to start cutting rates again. That's two years out. Don't you think that 3 years of recession, the rates would have come back down to something reasonable enough for a 30-year fixed? Like sub 4%? So, in the next 5 years, why would you want to stick with 5.5% instead of 4%?
Click to expand...

Dude - are you serious? You do realize inflation is at a 40 yr high and the Fed has no prior history of balance sheet runoff to the magnitude we're about to see. Get ready for a 7-8% conforming rate and a recession within 1 year. New buyers will get to experience what my parents did buying in Irvine in 89 - underwater for 8-9 years.
Click to expand...

This inflation is different from previous one. You can't compare it to 89. And did I not say that we're going into recession by end of 2023? Are you not reading? The point is, when recession hits, the Fed will start cutting rates again. Even when your rates start floating in 5 years, LIBOR could be low enough that you don't even have to refinance. Not to mention, the buyers today are better off the previously and they can withstand the recession.
 
Also, from what I understand, O-ARMs are different than today's ARMs.

People with O-ARMs were using the minimum payment which deferred interest and added to their balance at reset... which was problematic.
 
irvinehomeowner said:
Also, from what I understand, O-ARMs are different than today's ARMs.

People with O-ARMs were using the minimum payment which deferred interest and added to their balance at reset... which was problematic.
Click to expand...

Yeah, the one I had was interest only ARM.
 
CalBears96 said:
OCtoSV said:
CalBears96 said:
Soylent Green Is People said:
ARM's are still stigmatized by what happened in 2006-2009, but also due to the recent low rate environment. There is a strong pushback on ARM products. Some of the reasons? "Oh... my friend/co-worker/neighbor/(insert pronoun here) got a 2.75% 30 year fixed rate. I'm kicking myself for not acting sooner. Take an ARM that won't adjust for a decade? No Way! It could go up to thirty-teen some day. I'll stick with a 5.5% fixed rate" instead of a 4 percent ARM. Besides, I was told "you can always refinance". Blegh. Yes, a refi opportunity may come along. The view should be "possible" but not "always".
Click to expand...

"You can always refinance" should be a pro for ARM, not a con. Correct or not, everyone is expecting a recession by end of 2023 or 2024 at the latest, at which point the Fed will have to start cutting rates again. That's two years out. Don't you think that 3 years of recession, the rates would have come back down to something reasonable enough for a 30-year fixed? Like sub 4%? So, in the next 5 years, why would you want to stick with 5.5% instead of 4%?
Click to expand...

Dude - are you serious? You do realize inflation is at a 40 yr high and the Fed has no prior history of balance sheet runoff to the magnitude we're about to see. Get ready for a 7-8% conforming rate and a recession within 1 year. New buyers will get to experience what my parents did buying in Irvine in 89 - underwater for 8-9 years.
Click to expand...

This inflation is different from previous one. You can't compare it to 89. And did I not say that we're going into recession by end of 2023? Are you not reading? The point is, when recession hits, the Fed will start cutting rates again. Even when your rates start floating in 5 years, LIBOR could be low enough that you don't even have to refinance. Not to mention, the buyers today are better off the previously and they can withstand the recession.
Click to expand...
they can't cut - that's the point. They have to raise the Fed Funds rate to 4% minimum and they won't be buying any MBS to help the RE market. Interest expense will start to crowd out other spending priorities. Things are going to get really ugly especially as CPI inflation continues to march upward due to a variety of factors independent of monetary policy but greatly impacted by Vlad.
 
Everybody still believes in the 'Fed put' because it was in effect for so long.  The Fed was able to lower rates at the first sign of trouble for the past dozen+ years because the economy was in a sustained deflationary environment.  Those days are gone now.  Inflation is at 40 year highs and becoming more entrenched by the day.  The Fed no longer has the luxury of lowering rates at the first sign of pain.  They have to fight inflation for as long as it persists because politically they will get killed if they don't.
 
Irvinehomeseeker said:
It's time to increase the mortgage interest cap from the current 750K max considering the prevalence if jumbo loans with the price run up of homes
Click to expand...
That and the SALT changes but I don?t know if most of the country cares about these issues that primarily affect high COL areas.
 
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