Record Low Mortgage-Rates Skyrocket Over 4.0%

Mortgage lenders have adjusted their loan level pricing adjustments (LLPA) to ridiculous levels.

  • Prime borrowers with 740 credit scores, 30% down payment and/or 70% LTV, low debt to income ratio, and no pricing hits can still get mortgage rates in the high 3.0%
  • However, one pricing adjustment may jack rates up an extra 50 basis points
  • Prime borrowers with 800 credit scores but higher than 70% LTV will get a huge pricing hit where their rates will be in the mid to high 4.0% to 5.0%
  • Many lenders have stopped quoting rates unless they want to lock the loan right away
  • Rates are so volatile
  • Many loan officers are waiting hourly, day after day waiting for mortgage rates to drop

Massimo Ressa of Gustan Cho Associates said the following:

A search on Redfin resulted in literally zero lenders appearing in a search for a 30-year refinance. The page featured the following disclaimer at the top: “Quotes missing or too high? Our lenders are over capacity right now due to the latest interest rate cuts. We recommend checking back later.” For those that applied last week, the news is a little better. You might have locked in a low rate. But you may still have to contend with delays as lenders get bogged down.

Why Lenders Are Increasing Rates When Mortgage Rates Are At All-Time Lows?

Why Lenders Are Increasing Rates When Mortgage Rates Are At All-Time Lows?

There are two reasons why mortgage lenders are increasing rates when mortgage rates are at all-time lows.

  1. Capacity Issues
  2. Liquidity Concerns due to the economic meltdown in the financial markets

Some lenders have shut down taking on new mortgage applications and funding until further notice.

  • Non-QM lenders have completely suspended their operations due to liquidity issues
  • Just like the 2008 financial crisis, many non-QM lenders have shut down their operations
  • There are concerns many may be going out of business
  • To this date, we do not know of any single non-QM wholesale lender who is taking on new loan applications
  • Economists expect mortgage rates to come back down and to get priced accordingly in the coming weeks
  • Many experts are concerned about the non-QM mortgage markets
  • Many are concerned to see how many of them will shut down permanently
  • They are concerned about how many will survive the coronavirus pandemic mortgage meltdown

This is a breaking story. We will keep our viewers at Gustan Cho Associates updated on this story in the coming days and weeks.