Gustan Cho The Mortgage Expert,
Publish On: April 17, 2022
In this article, we will discuss and cover refinance mortgage rates pricing adjustments, and volatility. Refinance Mortgage Rates hit a three-year high this week. Rates hit a historic low of 2.25% on a 30-year fixed-rate mortgage earlier this year. Mortgage rates skyrocketed to a three-year high of 5.25% this week. Since the beginning of the year, mortgage interest rates have been steadily dropping.
Mortgage Rates Volatility Concerns:
Mortgage Rates Volatility is a major concern for homeowners who are planning on refinancing or those who are in the refinance mortgage process.
- Loan Officers should pay attention to locking mortgage rates before it is too late
- Mortgage Rates can go up and down
- However, if rates go up and do not make a correction, the refinance process is pretty much over
- The time and cost of the appraisal can go down the drain if homeowners who are refinancing already ordered a home appraisal and did not lock their rates
Mortgage-Backed Securities
Mortgage-backed securities tumbled again on Friday causing turmoil in the mortgage markets.
- The mortgage-backed securities market tanked by more than 200 basis points which marked the steepest one day drop in recent mortgage back securities history
- Mortgage Rates have never been so volatile
Mortgage Backed Securities Versus Mortgage Rates Volatility
When mortgage-backed securities drop and with mortgage rates volatility, mortgage rates rise.
- Friday marked the biggest rise in mortgage rates in a single day
- We have witnessed the biggest single-day mortgage rates increase in a single day in history
- Mortgage rates have seen the sharpest increase in history in the past several weeks
- Even with the holiday week, mortgage-backed securities plummeted 255 basis points
- The previous two weeks, mortgage-backed securities dropped 314 basis points
- Mortgage rates have risen 0.5% the past few weeks on almost all mortgage loan programs.
- Mortgage rates have risen for the 9th consecutive week
Better Than Expected Employment Report Adds Fuel To The Fire
Friday’s employment report came in better than expected which plummeted mortgage-backed securities.
- This rallied the stock market and it was great news for the economy but the end result was mortgage rates rising
- Labor analyst forecast 160,000 new jobs in June but records show that 195,000 jobs were added.
- Revisions of past months added an additional 70,000 jobs
- However, the unemployment rate remained at a constant of 7.6%
Highest Mortgage Rates Volatility Since The Great Recession
The majority of the major banks were quoting mortgage rates just under the 5.0% mark for conventional conforming mortgage loans.
- FHA mortgage rates were at 4.3875%
- Just a little over a month ago, FHA mortgage rates for a 30 year fixed rate mortgage was 3.25%
Where Are Mortgage Rates Headed?
Last week, mortgage rates hit a 36-month high after the Federal Reserve Board announced they will increase rates for the remaining of the year. This news from the FED skyrocketed rates instantly sent mortgage rates higher for the past three weeks. It created somewhat of chaos with borrowers with mortgage rates that were not locked. Despite the skyrocketing rates, home prices keep on increasing and remain strong. There are homebuyers who are backing out of buying homes until there is a market correction.
Refinance Mortgage Rates Highest in 36 Months
Mortgage rates were at the highest levels in three years. Rates are higher now than it was prior to the 2008 Real Estate and Credit Meltdown. Many homebuyers closed their home loans last year with mortgage rates at the 2.0% level. However, mortgage rates have been creeping up all year with no signs of correction. Fannie Mae and Freddie Mac announced huge loan level pricing adjustments on second homes and investment properties in early 2022.
Loan Level Pricing Adjustments on Second and Investment Homes Make Financing Difficult
Second-home and investment home buyers can expect to pay over 6.0% rates plus discount points. Many homebuyers with premium credit are closing their home loans at 5.75% plus discount points. In this blog, we will discuss refinance mortgage rates and how prime borrowers need to pay discount points. Homeowners who took advantage of refinance mortgage rates early this year are sitting well. Rates were at 2.25% on 30-year fixed-rate mortgages and 1.625% on 15-year fixed-rate mortgages in early 2022. Those rates were at the lowest level since 2007. Anyone with a mortgage interest rate over 5.0% or higher cannot benefit from today’s refinance mortgage rates.
VA And FHA Streamline Refinance Mortgages
Homeowners with VA and FHA loans are able to do VA and/or FHA streamline refinance mortgages. VA and FHA loans are the only two government loan programs that offer streamline refinances. Streamline refinance is a fast-track refinance loan program with limited documentation required. There is no home appraisal, no income docs, and no credit scores required. However, homeowners with higher credit scores should take advantage of our credit score qualification streamline refinance program. The reason being is that lenders will reward higher credit score borrowers with lower refinance mortgage rates. If and when mortgage rates plummet, homeowners who purchase a home with today’s high mortgage rates should consider doing a streamline refinance on FHA and/or VA loans. Keep an eye on the 10-year treasuries and mortgage rates.
Refinance Mortgage Rates on FHA and Streamline Refinance Mortgages
Most VA and FHA Streamlines close in 21 days or less. There is no money out of pocket on streamlines. Most streamline borrowers often get to skip two mortgage payments. Many streamline borrowers will get cashback due to escrow refunds and/or overages. Gustan Cho Associates are experts in VA and FHA Streamline Refinance.
Refinance Mortgage Rates on NON-QM To Traditional Mortgages
Non-QM loans are becoming more and more popular every year. Many homebuyers who do not qualify for government and conventional loans take advantage of non-QM mortgages as a bridge loan. NON-QM loans have much higher mortgage interest rates than traditional government and conventional loans.
Non-QM Loans After Foreclosure and Bankruptcy
There is no waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. Borrowers with late payments in the past 12 months can qualify for non–QM loans. Many non-QM borrowers have mortgage rates in the 7% to 9%. NON-QM borrowers can take advantage of refinancing non-QM to traditional government and/or conforming loans due to low mortgage rates. Homeowners should keep an eye on the mortgage rate volatility and when rates plummet, they should consider doing a refinance to conventional and/or government loans.
Will Refinance Mortgage Rates Drop?
Home prices have increased in most parts of the U.S. The Federal Housing Finance Agency (FHFA) has increased conforming loan limits for six years in a row due to high home prices. HUD has followed FHFA’s lead in increasing FHA Loan Limits for six years in a row. Many homeowners do not realize how much their home has appreciated in value in the past few years. In some areas, home prices have seen double digit appreciation year after year. Homeowners should consider doing a cash-out refinance to pay off their debts. Taking cash-out from your home’s equity is tax-free. No taxes need to be paid from the proceeds in a cash-out refinance. Homeowners can do whatever they like with the proceeds of a cash-out refinance. Home improvements, paying off high-interest credit card debts and making investments are common things many homeowners use with their cash-out refinance proceed. Mortgage rates will plummet. When rates drop, it will drop like a rock. Every homeowner should keep an eye on mortgage rates. When rates plummet, be ready to refinance.
