Just when we thought the main stream media just might have a clue about the housing market, they prove once again that they don’t. This week is just another reason you have to keep informed and know the reality of the markets so your clients and referral partners don’t make poor choices.
Mortgage application data was posted this week that showed a drop in purchase and refinances, and the nonsense began to flow. People actually saying refinancing opportunities were over as mortgage rates have begun to rise!
Are you kidding me? I often wonder how people get paid for such stupidity. The reality is, rates are still trending LOWER. Yes, we are seeing volatility. Yes, trading ranges are pretty broad. But we have mentioned here before that the trend will continue lower from trading range to trading range. We have not seen the bottom of this market, and the refinance cycle has just begun!
We have all the people who have closed in the past year who can come down in effective rate. We have those who need to refinance out of FHA loans and into conventional loans to reduce or eliminate MI costs. We have a whole group of people who used JUMBO loan products who could easily refinance from their current high 4% to low 5% loans into a conforming loan in the 3’s using the $484K loan limit, even if they had to bring some cash to the table it’s a great deal! We must also not forget the biggest part of the equation, either reducing term of the loan or just plain selling and buying the home they really want!
We have a good way to go before these opportunities go away. I think we could see all time low rates for sure, but also, the large number of people who waited on the “bottom” of the market to jump in as soon as the market rebounds and begins to rise once again.
Some estimates are that there are almost ten million homes in this country that have a current mortgage that is higher than 4.5%! We certainly haven’t made personal contact with all of them yet! So refinances are still there for the taking. Purchase business is also more restricted by inventory issues in most markets, not the lack of qualified and interested buyers!
We will know where the bottom of the market is about six months after it happens. I am certain that time isn’t today! So reach out and make personal contact with your people and explain their opportunities and their options. You can’t just rely on email and mailers to get the job done.
Don’t let bad information dictate your market. Make your market by being the local professional people trust to present the real information and the real opportunities!
As always, questions and comments: Mike@IMTcoaching.com