You are most probably aware that rates have been rising since November of 2010....but many people who don't work in our industry are NOT. When issuing a rate quote of 4.75 recently the client responded "WOW!!!! I thought rates were down in the 3% range." How did I handle this???? By sharing factual information. I provided the chart below and covered some talking points.
I showed them that rates hit 18.45% in October of 1981 and that the AVERAGE rate over teh past 39 years is 8.93. I then showed that from 1971 - 2001 rates fell below 7% for just 12 months in that 30-year period of time. YES!!! most of our lives we have had rates ABOVE 7%. In 2001 we have had a chain of events that has pushed rates FREAKISHLY low beginning with the dot.com bust, 911, Tyco, Enron, Afganistan, etc. This has sent rates down to the low 4% range late last year.
I'll then ask if getting a 4% return on their 401k or other investments would be satisfactory...to which most say..."I expect better than that....I got 14% last year."
Most people do expect better than that which is why rates can's stay that low. Investors want a better return on their money and won't buy mortgage backed securities that provide such a small return. The economy is slowly improving and rates will be headed NORTH along with it.
The good news is that you can still get rates lower than you are apt to see again in your lifetime.
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