While the news reports all time low interest rates because of market indicators and market conditions, rates continue to rise...why is this?
Well the Bottom line is, lenders and wholesalers alike are swamped. Over the past 24 months, operations staffs have been cut tremendously. Two wholesale lenders alone have generated $750MM and $458MM of locked loans in less than 24 hours.
A lot of these locks were registered for 30 days. Let's face it, there is only so many loans that can be originated, processed and funded in a given time with a limited number of bodies.
As some lenders have already initiated HVCC guides, turn times have only gotten worse and risk falls on the investor for locked loans that do not close.
If you are a lender and are faced with the decision to accept more locked loans that cost you anywhere from 0.25-0.50% if they are not funded, you simply ramp up rates to thwart off increased volume.
Taking a look at the MMG Bond Quotes page shows that the FNMA 30 Yr 60 day yield is 4.24% today. Under normal conditions, this would bring rates around 4.625%. However, in the St. Petersburg area today, rates are around 5.125% without paying points.
At the very least it is frustrating for all of us in the markets because we can not offer the rates that should be available until the volume of loans slows to the point that investors want to increase their loan intake again.
I read elsewhere that Chase retail is charging borrowers .50% to lock and that they will not accept less than 70 day locks on refi's. At least this is what someone stated. Perhaps a Chase LO could comment here to either validate or dispute.