TODAY’S INTEREST RATES
We saw some nice rate improvement last week,
but those improvements were taken back this week.
Fears over the Omicron variant, sent the stock market tumbling last week
and mortgage interest rates improving.
This week, the news cycle is reporting less severity and more options
to lessen the effect of the Omicron variant
So the exact opposite is happening.
As a consumer, if you see a headline that will negatively effect
economic production or consumer buying activity –
you will see a similar trend repeat itself over and over again.
The stock market will plunge, mortgage interest rates will improve.
If you see a headline report that could lead to increased economic production
or stats that have shown economic improvement,
The stock market will go up, mortgage interest rates will get worse.
Usually the rate improvements are short lived. Typically 2-5 days.
This is when you want to take action specifically on a refinance to secure and lock in your rate.
See Mortgage Backed Security Market below
– green movement up about November 28th is followed
by red movement down December 6th.
Green – better rates. Red – worse rates.
Overall, rates are slightly higher this week than last.
Below is today’s rate sheet for well qualified borrowers.
BETTER.COM CEO LAYS OFF
9% OF STAFFON ZOOM CALL
EXPLAINING THE POWER BANKING MODEL
Better.com is a mortgage start up that pitches better rates / a better loan process
and has capitalized on the refinance boom over the past 2 years.
Just this week they cut 9% of their work force
most likely caused by refinance production being down.
Many consumers don’t know the various mortgage company structures out there,
so I wanted to take time to dive into this particular model.
Many companies or company divisions have what is often referred
to as a “Power Banking” model.
A Power Banking Model typically involves these characteristics:
· Hiring Loan Officers with little to no experience.
· Training them and getting them licensed.
· Paying them very little per transaction – but funneling them a lot of opportunities through leads.
· Loan Officers are trained to sell a loan and possibly get documents from client
· Loan Officer is no longer involved in a transaction after loan is locked and docs are in.
From a consumer or buyer agent standpoint,
there are a couple things to be cognizant of.
Inexperienced Loan Officers and Loan Officers trained specifically to sell
and not advise often leads to poor mortgage advice.
An LO that doesn’t work off referrals and is not involved in the transaction
from start to finish has no skin in the game,
Nor are they motivated to give great advice as referrals aren’t necessary
if said company is providing more than ample lead volume on a daily basis.
Think about this if you are buying a home and presenting your offer to a seller.
Good listing agents have worked with many different lenders
and often know what to expect on the performance from a lender.
Would a listing agent/seller rather work with a Lender that is involved in the transaction
from start to finish and gets the majority of their business by referrals
generated because of high performance/great communication.
Or would a listing agent rather work with a Lender where the LO
is not involved past initial sale and works primarily off
new leads the company provides.
The reputation of a Lender can often be a deciding factor
in whether an offer is won in a competitive offer situation.
As the power banking model tries to move into the purchase market
due to refinance origination expected to drop 60% in 2022,
Consumers are going to see more and more competition in this space
and I think it’s important to know who you are working with?
If I’m buying a home and shopping lenders,
here are some non product questions I may ask:
Questions to Ask Your Loan Officer:
How Long Have you Been a Licensed LO?
Or you can look it up here: https://www.nmlsconsumeraccess.org/
Are you involved in the transaction from start to finish?
Do you systematically update me and the other parties involved in our transaction?
When I put in an offer, do you know how to do a Prequalification?
(this sounds funny, but many power banking LOs don’t know how to do an AZ specific Prequalification)
Will You call the Listing Agent and Highlight My Qualification to give me the best chance of getting my offer accepted?
Do You Offer Preapprovals before I find the home I want to buy?
(this is getting an underwriting approval upfront which is viewed as a stronger offer)