Now of course, rates seem poised to tick up, but in terms of any 30 or 40 year pattern, they are likely to seem low.
“We’ve actually been expecting them to go up for the last two years, and the Fed just keeps keeping them low because they are trying to get the economy kick started,” said Zach South, president of Best Rate Referrals.
“Once they start raising rates it is going to obviously affect things on multiple levels. What we are hearing is that by Q3 we should start seeing some movement in interest rates. I think they are keeping them low obviously because it is political season. After that I don’t see any reason they don’t start ticking up. They almost have to.”
Once rates start ticking up, South said, any originators who have been focused primarily on the refinance market are going to want to make sure they are ready for a market almost entirely focused on purchase.
“Once rates begin to go up, the low hanging fruit of refinance will start to dwindle, the amount of people who can benefit from a refinance will dwindle,” South said. “A lot of People will have to start thinking about and planning to move into the purchase market, and we are already seeing that. A lot of larger organizations are starting to set up purchase departments and are moving bankers from refi to purchase just so they aren’t stuck when rates start to go up.”
South said Best Rate has been planning for higher interest rates for several years, ramping up its lead generation on the purchase side, trying to get ahead of the game.
“What is your game plan when rates finally go up?” he asks brokers. “You don’t want to be late to the game.”
In the mortgage business, interest rates are always on people’s minds. While there have certainly been ups and downs, rates have been falling pretty steadily for the last 35 years. Anyone remember 17% mortgages?