Broker talks sudden change in buying, refinancing environment
Growing concern over the prospect of an economic downturn saw US mortgage rates fall sharply last week, a development that could provide a shot in the arm to the national mortgage market as it gears up for the final stretch of the year.
Freddie Mac data showed the average 30-year fixed-rate mortgage rate dipped to 6.47% last week, a further slide away from the 7% mark as fears continued to mount over rising unemployment and a rapidly cooling economy.
While a September interest rate cut by the Federal Reserve already looked a near certainty given the central bank’s dovish language following its last decision, markets are now expecting that move to be an even bigger one than originally anticipated.
The latest drop in mortgage rates has proven a boost for homeowners and prospective buyers alike with some now prepared to resume their refinancing or purchase plans thanks to slightly lower borrowing costs.
Kurt Brandly (pictured top), president at the Greenside Capital brokerage, told Mortgage Professional America that recent days had already seen an upswing in queries following the unexpected stock market tumble and rate slip. “You just have to be ready to seize the opportunity, which we have been doing,” he said, “reaching out to current clients, letting them know that we can put them in a better spot or reach out to referral sources and other clients to see what we can do for them.”
Prominent among the queries fielded last week were clients who had closed during the previous year checking to see whether they could now take advantage of a lower rate or different product, he said, with others benefiting from VA or FHA streamlines. “We’ve seen a lot more volume,” Brandly said, “a lot more prospective clients reaching out to us either looking to buy or refinance.”
How far will rates fall?
Still, a word of caution: while a reasonably significant mortgage rate drop has taken place over the last couple of weeks, it may be premature to assume that rates will fall even further as soon as the Fed cuts rates in September.
Yury Shraybman of Innovative Mortgage Brokers suggests that current buyers may benefit from making a purchase now and refinancing later, as waiting could result in losing out on homes or paying significantly more.
— Mortgage Professional America Magazine (@MPAMagazineUS) August 9, 2024
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That’s because markets price in the likelihood of Fed rate cuts before they happen – meaning current rates probably already reflect a move by the Fed to lower rates. In fact, “when that rate [cut] does come in September, we actually might see rates pick up a little bit from the point they’re at,” he explained, “if the Fed doesn’t address it in a way that kind of signals aggressive rate cuts in the future, which a lot of people are expecting.”
Bloomberg reported this week that traders were even beginning to price in a possible imminent emergency rate cut to assuage fears over the direction of the national economy.
For now, that looks unlikely – but Brandly said the expectation is definitely for rates to continue moderating in the year ahead. “I really don’t think [an emergency cut] is going to happen, but we definitely will see rates lower in the long-term future,” he said, “because the Fed is going to probably soften.”
AIME proves invaluable resource during return to industry
Brandly re-entered the mortgage space this year, having taken some time off after working in retail for a lengthy spell as a banker at a leading mortgage firm.
Entering the broker space, he was seeking networking, resources and tools – and found those through the Association of Independent Mortgage Experts (AIME), which he described as a huge asset in helping him take his early steps back in the industry. “Community is everything,” he said.
“It’s one of the great things about working for a big company, but you also get that when you join a network like this. They gave me a lot of the resources I need. They gave me direct mentorship. They gave me a lot of things I needed to actually be prosperous in this industry.”
It’s helped contribute to a successful first year back, even in a turbulent and unpredictable market. “It’s exploded in production because of a lot of the resources I’ve been able to get from AIME,” he said, “and so it’s been a very beneficial partnership.”
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