By Matt Joy, Princeton Mortgage Wholesale
The 10-year Treasury Note is about 25bps from hitting 3%. This is the 10-year’s highest level since January of 2014. Okay? So, what does that mean? Well… the 10-year Treasury yield is a good barometer for long-term fixed rate loan products and when the 10-year goes up, typically mortgage interest rates follow suit. Typically, stock market movement like we’ve seen means that investors will move their money to the bond market, but because of growing concerns for the U.S. deficit and inflation… the once predictable bond market has begun to deviate from it’s normal course. This morning National Mortgage News and Wall Street Journal published articles about this very topic and what impact higher mortgage interest rates have on the economy entering the spring & summer home buying season. Experts seem to think that it won’t slow things down… however if Fannie or Freddie were to come out and change the 2018 mortgage forecast… then we’d have a different ball game on our hands. For the time being the agencies have not yet changed their stance, but it’s something to look out for.
On Friday, our very own Josh Teti discussed the most recent news regarding Wells Fargo and their $1BB settlement to cover erroneous rate lock extensions that were charged to their borrowers on both auto and home loans. Let’s skip over the auto loan part (not because it’s not important, but because it’s not important to this blog) and discuss the $98M in rate lock extensions charged to some 110,000 borrowers… look, extension fees are bound to happen. We all know that sometimes during the origination process legitimate, unforeseen problems arise and an extension is justified, but the explanation as to WHY that extension is being charged must be clearly outlined to the borrowers. The details of the Wells settlement are murky at best and I don’t have all the specifics, but it appears to me that the locks were extended without properly educating the borrowers as to why and as a result Wells is paying the price.
I think the take away from this is twofold. First and foremost, we (the mortgage industry) need to take what happened to Wells Fargo and constructively use that to ensure that rate lock extensions are clearly explained to our borrowers. That’s easy… now who listens to that and makes it happen? … I can’t predict, but what I can predict is that borrowers are going to become increasingly educated on this whole loan process thing. We’re already seeing borrowers take the appropriate measures to find the best rate… EVERYONE is being shopped. Trust me. Now, combine a rate savvy borrower with a borrower who also understands that their pricing can’t just change without an explanation… you have a smart consumer becoming an even smarter consumer. It’s going to be important for lenders, brokers and LOs alike to stay on top of their game because… we know borrowers are. Talk to you soon!
MJ
Photo by Chris Liverani on Unsplash
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.