What Is Driving Mortgage Rates Up You Ask?
It is borrower demand plain and simple! As I will explain in my video update, there are three primary reasons why the secondary market investors are offering rates way above where pricing should be when looking at the value and costs of a mortgage backed security as of market close Friday. The similar comparison I use in the video is when oil prices stay the same but prices at the gas pump continue to climb. The concept of supply and demand is ringing true.
The three primary reasons we cannot lock into lower interest rates currently is;
#1 Lack of staff to underwrite, process and fund loans in a timely manner before the lock commitment expires.
#2 Lack of money in warehouse lines or investors equity lines to fund the amount of deals coming in.
#3 Profit taking, these investors need money to hire their staff back, recovering losses from 2008 and simply enjoying the fact they CAN charge a higher yield or premium right now as all of their competition is too.
Have you ever watched 3 gas stations on opposing corners raise their price per gallon a penny more than the two across the street only to have the other two follow closely behind with a leap frog by 1 cent? Same concept.
I hope this was helpful.
Be Blessed!
Comments(3)