I Did Something I NEVER Do
The market took a wild ride this week, brought us the lowest rates we've seen in quite a while (which inspired this blog), made the phone ring a few more times than usual, and opened the door for a few previous clients to knock PMI right off their loans (Winning!).
While this week's news on plummeting rates was exciting, I kept a few market "rules" in the back of my head as things started looking better and better. For one, Friday is traditionally a bad day for mortgage rates. Fridays following a week full of improved bond pricing are traditionally even worse. Fridays following a week full of improved bond pricing and preceding a long holiday weekend are even worse than the preceding 2 scenarios.
Oh, and that pesky stock market. When the stock market gets absolutely hammered like it did the past week, there's (almost) always a reaction that those in the marketplace like to refer to as a "dead cat bounce". Don't worry about visualizing where they came up with that phrase. I digress...a dead cat bounce is an opposite reaction to a steeply trending market movement. Since stocks were down, down, down Monday thru mid-Thursday, traditional wisdom said the dead cat would indeed bounce and stocks would rebound today.
Herein lies the problem with people trying to "catch the bottom" of the market, or get the "best" rate. The market is usually in a position that's a couple of hours (at best) from at least a short term reversal. That couple of hours is almost ALWAYS in the middle of a borrower's work day, at their busiest time, and when they can't reply to emails or answer the phone. The trouble becomes, it's a clients decision to lock, not mine. So something I NEVER do is lock someone into a rate that they haven't confirmed they want. Yesterday, though, I did it. I predicted today would be a pretty rough day for interest rates (see those traditional "rules, above), and the DOW showed a reversal yesterday from down 400 points to down just more than 200. As I saw the trend begin to reverse, I got on the phone to make the "we should lock" phone call.
Of course it was the middle of both clients work day, at a time when they weren't answering phones and couldn't respond to email. Both of their loan amounts were large enough that even a change of .125 in the markets would result in hundreds of lost dollars. Both were past clients with whom I have great rapport. So I made a decision to do something I NEVER do. I locked them both into rates without their OK to lock in.
When they finally got back to me, I apologized. "Mrs. Borrower, I don't normally do this, but I locked you into an interest rate". My apology was sincere, but more of a "sorry not sorry", as I then explained I was able to lock in a rate .125 better than we'd discussed the previous evening, with a lender credit of more than $1000 over what we had initially discussed.
I had a similar conversation with the other Mrs. Borrower. Locking in without permission saved her and her husband about $800. They were both pretty OK with me making an executive decision on their behalf.
I'm a strong believer that ASSuming things isn't a good idea, and I don't like to make financial decisions for people, ever. I believe in being a guide, educating people on options, and letting them make their own decisions, for better or worse. But sometimes, you've gotta do what you've gotta do. In this instance, I'm glad I was able to save these folks money and use my market experience to make the right move.
In the mortgage industry, experience counts, and in a market as volatile as todays, it's even more important than ever!