As many of you know, rates have really been on the move over the last 2 weeks. Rates have continued to increase due to a better outlook for the 2010 economy. Although I am extremely skeptical of this economic recovery many think is right around the corner, I do believe that the days of 4.5% - 4.75% on 30yr fixed mortgages are past us...
The biggest problem with sudden rate increases like this are obviously the immediate reactions of many of the clients we are working with. Some are in denial rates can actually go up and sometimes will put off the entire process until "rates come back down". Unfortunately many people are reluctant to realize that rates eventually do have to go back up!!!!!!!!
I am here to say that, "HELLO PEOPLE, 5.0% IS STILL A FANTASTIC RATE!". Lots of the time people become obsessed and fixated on getting the lowest rate that is humanly possible (which obviously is the name of the game) but forget that the goal is to reduce or minimize monthly obligations. So while 4.5% makes for a lower payment, rolling the dice on 5.0% in hopes of rates coming back down can result in a lose-lose situation. The volatility of the day to day economy can cause these painful rate moves which can either bring us back down to all time lows or shoot us up back to historic averages. The underlying problem is that everyone thinks they can time the market... Well as we have seen over the last couple years even the fat cat Wall Street big wigs cannot time the market, so lets keep the gambling to Vegas and Atlantic City, and remember that lower payments are the name of the game.
I look forward to your responses on how you are currently dealing with your clientele in a rising interest rate environment.
HAPPY NEW YEAR!!!
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