Minneapolis, MN: Yesterday the Federal Reserve “clarified” to everyone when it will likely end its economic stimulus program. This ended weeks of speculation that has caused mortgage rates to surge to the highest levels since 2011, and up over 1/2% in physical rate in the past two months.
Based on the news, it appears mortgage rates have a new bottom, which is about where they are at today. There is plenty of room for rates to move higher. Express this to your clients, and get the fence sitters moving.
Loan Officers and Real Estate Agents have great fear for future purchase activity. Is it founded? “There should be some concern, but overall, I only expect a minor slowdown in purchase activity. People always buy homes, regardless of rate.” said Eric Metzler, a Senior Loan Officer with Cambria Mortgage in St Paul, MN.
Will home sales fall as rates rise? Sure… But most people will still buy, just maybe a little less home. As for the future?? If you are a full time experienced agent with a good past client based, I wouldn’t worry about it.
Desperate Loan Officers
Today, a huge number of Loan Officers have been living largely on refinance activity. This business will drop dramatically as rates creep up. Many of these Loan Officers have little, if any, purchase business experience. We would expect to start seeing layoff’s from many of the larger banks, and online refinance powerhouses. We should also start seeing Loan Officers back again hitting the streets, trying to drum up Realtor referral business.
My world of advice is to pass on refinance specialists trying to turn into purchase loan hopefuls. While basic loan requirements are similar, purchase loans have a whole new world of requirements for these Loan officers, and you don’t want them experimenting on you and your clients. Stick with licensed, and experience purchase loan specialists like myself.