Lock It or Lose It

Mortgage rates have been very volatile these past few days.   Yesterday morning, I posted that the 30 year conforming fixed was under 5% and by the end of yesterday, mortgage rates had increased by 0.375% to rate or around 1% in fee. 

Rate shoppers lost out big time if they did not lock.

Rates are continuing to rise at this time.  Please don’t dilly dally with your mortgage interest rates.  There are fewer Mortgage Professionals to assist you in our current market and many of us experienced (and I’m still seeing it today) banks being “clogged” with people trying to lock…websites “down for maintainance”…etc.  By the time a Mortgage Professional can get through to lock in a loan, the rate is gone.  Bam.

Next week has offers a full menu of events that promise to impact mortgage interest rates:

  • FOMC Meeting on Wednesday, January 30th.   (If the Fed drops the Funds Rate…mortgage rates may rise).
  • Thursday, January 31 will bring us several economic reports which will indicate inflationary levels such as the PCE and the Chicago PMI.
  • And as next Friday is the first Friday of the month, we will wrap up the week with the Jobs Report.

Again, I highly recommend that you lock in your interest rates for conforming loans and make sure it’s for enough time for your transaction to close.   A possible bright spot:  the conforming loan limit may be increased…no promises but this will be great help for the JUMBO market from $418,000 – $620,000.

Bye for now! 

Update January 24, 2008 at 2:55 p.m.:  I just priced the 30 year fixed conforming at 1% origination/discount…I can barely lock in 5.5% (APR 5.642%) based on my usual criteria for “Friday’s Rates” (which I will be posting tomorrow).   Is it 5 yet?  😉

78 thoughts on “Lock It or Lose It

  1. Congress is getting ready for a major announcement…I’m glued to CNBC while I’m locking loans and providing GFEs.

    Yesterday was an exercise in frustration…you should see the wrinkle that’s going up my forehead (thank God I don’t have a webcam).

  2. I’m one of the ones who lost out… not “fence sitting” by any means, but we had verbal acceptance and hadn’t seen anything in writing until last night. Locked in this morning, but it’s amazing that this time yesterday I could have gotten .375% less!

  3. Wow what a day yesterday was! Lock it or lose it, amen to that sistah!

    Unbelieveable! But sadly, verified.

    Did you see the stimulus package includes an increase to the conforming limits? After I get the details, it’s off to the races!

  4. Looks like the proposal to temporarily raise the conforming loan limit for Conforming and FHA (wow!) will be through December 31, 2008. The loan limits will vary by area (like FHA now) and will be based on 125% of the median home prices UP TO $730,000.

    This is expected to be passed very quickly.

  5. Rhonda, do you know of the proposed GSE limits for an area will be based on the SFH or the SFH + condo median? I think the nwmls area median for condo and SFH combined was something like $320k in December while SFH alone were in the $430k area. 125% of $320k want be more than the current $417k but 125% of $430k would be a nice lift to ~$540k. Or do you know if the areas would be more local than the nwmls?

  6. Kary, good question. However, based on the fact that they kept the conforming loan limit at $417,000 when they could have dropped it this year based on lower home prices.

    I just received this memo (looks like Pres. Bush forgot to schmmoooze James Lockhart):

    For Immediate Release
    January 24, 2008


    We are very disappointed in the proposal to increase the conforming loan limit as we believe it is a mistake to do so in the absence of comprehensive GSE regulatory reform. To restore confidence in the markets we must ensure that the GSEs’ regulator has all the necessary safety and soundness tools.

    Yesterday Chairman Dodd talked about moving a GSE reform bill early this year. We are ready to work with him and the Senate Banking Committee. We will also be working with Fannie Mae and Freddie Mac to ensure that any increase in the conforming loan limit moves through their rigorous new product approval process quickly and has appropriate risk management policies and capital in place.

  7. I’m seeing two different numbers for the King County median sales price:

    “After falling for four months in a row, the median sales price of King County’s single-family houses stabilized in December at $435,000” ..Seattle Times 1/12/08


    “The median sale price for a home in King County fell to $389,500 last month from $399,900 a year earlier, which is a 2.6 percent drop”. Puget Sound Business Journal 1/07/08.

    Of course, FHA may use their own methodology, but the best case scenario looks like an increase to $543K, which unfortunately will not help as many loan scenarios as I had hoped.

    Love to see your numbers, Rhonda, when you get them.

  8. That was my thought as well, but the methodology prescribed by the bill may use something different. They may also use a different area parameter than county, like a DMA, so the effect here could be even smaller.

  9. I agree with Director Lockhart. Why should the government be subsidizing (directly or indirectly) loans for very high priced houses, purchased by well off folks? As it is, the GSE’s have enough troubles of their own.

  10. laxtosnoco –
    The raise is not going to have the desired effect because of the GSE issues. They can raise it to a billion dollars and the GSE’s will still have a hard time convincing people to buy their paper, the days of Fanny/Freddie paper being good as gold are over for the time being. This is just more political posturing like the $300 checks, too little way too late.

  11. b – I think that at the very least, the raised limits will create a refi boom and I do believe it will get some “jumbo” buyers off the fence too.

    A refi boom right now will be a bit messy. Many of us Mortgage Professionals had a big reminder of previous years during these past 2 days of not being able to lock loans due to jammed web sites and phone lines…

  12. I’m working on rates for RCG right now…however I’m “stalling” to see if the rates improve from what I posted this morning at Mortgage Porter.

    Currently the spread between conforming and jumbo rates is 1.25%.
    Last Friday, it was only 0.875% (comparing 30 year fixed).

  13. Pingback: Friday’s Rates: 30 Year returns to the Mid to Low 5’s | Rain City Guide | A Seattle Real Estate Blog...

  14. Don, I agree that’s a possibility. At the very least, I’m sure lenders will bracket loans from 417,001 – $625,000 (or what ever the limit is) and have an add to rate of 0.25% (or something like that).

  15. It’s going to be very interesting to see how the GSEs and lenders treat the increased loan amounts. I’m hoping that loan amounts under $417,001 don’t pay the price for the former “jumbo” amounts. Many lenders have all ready added a “market condition” fee of 0.25% (to fee/price and not to rate) to rates based on our current landscape.

  16. Hi Rhonda,

    When do you think the law will be signed off and the Jumbo will go up to $600,000.00 as I am in an escrow at this moment, and the loan is $517,000.00.



  17. Dave, great question. How much the jumbo loan limit will be depends on what area you are in. It’s estimated that in the Seattle-Bellevue area, the limit will be just under $500,000. HUD will have up to 30 days to publish this information after it’s signed into law. And Fannie and Freddie need to determine what additional underwriting guidelines there may be for loans $417,001 – ?. OFHEA is estimating this could take months although I would assume that Fannie/Freddie are not waiting to figure guidelines out. My best guess is that new loan limits could happen in March. When they do, I’m betting there will be a price hit, like 0.25% to rate for loans over $417,000 which is still better than our current jumbos.

  18. Dave, what a small world. I lived a year or two in Canyon Country as a teen (many many years ago) and we also lived in about a year in Acton (near Agua Dulce). I know exactly where you live! 🙂

  19. Hi Rhonda,
    We also built a house in Agua Dulce in 1989 and lived there until 2005 and leased it now. It was a great place to raise our 2 boys who are now adults. Sierra Hwy. is really improving with the College of the Canyons second Campus 1 mile north of our Gallery on Sierra Hwy. and the City of Santa Clarita investing in improving this area. Our store is one mile norht of Soledad on Sierra Hwy. and Barbara and I have been running it since 1983. What years did you live here in Santa Clarita?

  20. Dave, We’re talking about 28 years ago (oh boy, that makes me feel old!). We lived across the street (literally) from Vasquez Rocks for almost a year and then moved to Canyon Country…I think the street was Deep Creek Drive. I’ve heard Santa Clarita has changed a little bit since I was there last. 😉

  21. Hi Rhonda,

    It still is rural there, as all the homes are on wells, and it has not been built up as much as Canyon Country or other parts of Santa Clarita. I really like the Vasquez Rocks, and we also have a view of them from the porch of our Agua Dulce home too.

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