Rate drop good for business?

by Justin da Rosa04 Dec 2015
With all signs pointing to a mid-December rate hike, should originators expect an influx of business encouraged by the most recent rate data?

The benchmark 30-year fixed mortgage rate fell to 4.01% this week, according to Bankrate.com’s weekly national survey. That represents a decrease from the previous mark of 4.07%.

“With all signs pointing to a mid-December interest rate hike, such expectations are largely baked in already,” Bankrate said in a release. “Increasingly, the focus and catalyst for movement revolves around the perceived trajectory of future rate hikes.”

Despite the fact that rates are low originators likely won’t expect a flood of business leading into the holiday season, due in part to seasonal trends and the expectation that low rates will continue on in the interim despite the expected Fed rate hike.

“While the economy is currently performing well enough to justify an initial rate hike, it certainly isn't going gangbusters which indicates that rates will likely rise very slowly going forward,” Bankrate said.

Further, applications are already cooling along with the weather.

According to Bankrate, mortgage applications fell 0.2% week-over-week for the seven days ending December 2.

Still, there is some good news for brokers: home prices are expected to increase 5.2% year-over-year from October 2015 to October 2016. That optimism will likely convert the fence sitters who have delayed in purchasing.

As a result, Dick Lee, president of Independent Mortgage is encouraging clients to get aggressive with their purchases.

"If you see something ... between now and New Year's, jump on it," he told Bankrate.

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