Life is getting difficult for home buyers and rate shoppers. Since the start of April, mortgage lenders are averaging 2.25 rate sheets per day.
Mortgage Rate Velocity -- the pace of rate sheet change -- is as high as it's been in a year.
What Is A Mortgage Rate Sheet?
A rate sheet is a mortgage bank's "menu". It lists rate-and-points combinations for every loan product available. Some rate sheets are just a page; others go 10 pages or more. Most are now electronic.
Rate sheets show the "right now" pricing on products including:
•30-year, 20-year and 15-year fixed rate mortgages
•Short-term ARMs like 1-year and 3-year products
•Long-term ARMs like 5-year, 7-year and 10-year products
•Jumbo and super jumbo mortgages
•The complete line of FHA and VA mortgages
•Loans for condotels and non-warrantable condos
Rate sheets change with the market and, lately, markets have been wild.
Mortgage Rates Are Changing Every 3 Hours, On Average
In January, mortgage rates changed every 6 hours. Since late-March, however, they've changed every 3 hours.
That's two times as fast. There's no "calling you back in the afternoon" or "thinking about it overnight" in a market like this. Unless you're watching real-time market updates, it's pretty much a guarantee you'll get burned.
Want that rate you were just quoted? You better lock it right this second.
It's Going To Get Even Worse For Rate Shoppers
The pace of change in April is just the beginning. By June, today's Mortgage Rate Velocity will look tame; as a turtle to a hare.
The Fed is officially gone from the mortgage market and its absence has left markets in doubt. The Fed was a stabilizer, if nothing else, and with it gone, there's questions about whether investors will step up to fill the demand void. Especially because stock markets are throwing better returns and debt concerns are easing around the world.
Mortgage bonds fared well in 2009 because the world was on fire. This summer, that won't be the case. Mortgage Rate Velocity will eclipse its all-time highs.
Shield Yourself From Mortgage Rate Velocity
As a loan officer, I track mortgage data in real-time, and summarize it online to to Facebook. I send alerts to my audience before new rate sheets come out so everyone can stay ahead of the market.
You need to be plugged in. If you manage them right, my alerts should save you tens of thousands of dollars over the life of your mortgage. It'd be silly not to pay attention, really.
However, being "alert" is only one part of being ready. You must also have a loan application on file with your lender.
Banks can't give rate locks without full applications.
Applications-by-phone are a 4-minute process. To give one, call my office at 510-799-1400 or send me an email. Then, when it's time for you to lock, you'll be glad you were ready. Markets move quickly and your mortgage is a huge financial instrument. It's not something to gamble with.
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John Payne is an active loan officer. Email John@JohnPayneLending.com or call 510-799-1400 or 800.259.3424.
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