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Mortgage rate plunge lowers a no-cost, 30-year fixed refi to 3.9%


By Jeff Lazerson


What’s up with mortgage rates? Jeff Lazerson of Mortgage Grader in Laguna Niguel gives us his take.

Rate news summary 

From Freddie Mac’s weekly survey: The 30-year fixed is at its lowest level in 14 months, this week averaging 4.06 percent, down an astounding 22 basis points from last week. The 15-year fixed rate averaged 3.57 percent, down 14 basis points from last week.

The Mortgage Bankers Association reported an 8.9 percent increase in loan application volume from the previous week.

Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $484,350 loan, last year’s payment was $96 higher than this week’s payment of $2,329. 

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages at zero cost: 15-year and 30-year FHA (up to $431,250 in the Inland Empire, up to $484,350 in Los Angeles and Orange Counties) at 3.50 percent, a 15-year conventional at 3.625 percent, a 30-year conventional at 3.875 percent, a 30-year FHA high-balance (from $484,351 to $726,525 in L.A. and Orange counties) at 4.0 percent, a 15-year conventional high-balance (also $484,351 to $726,525) at 3.875 percent, a 30-year conventional high-balance at 4.25 percent, a 15-year jumbo (over $726,525) at 4.50 percent and a 30-year jumbo at 4.75 percent.

What I think: Mortgage rates are dropping like a lead balloon.

Well-qualified borrowers can get a 30-year fixed refinance under 4 percent with zero cost. Purchase and refinance borrowers can pay a point and get 3.625 percent today. Nice!

What gives? The U.S. economy is still doing pretty darn good. We can thank economic global headwinds that are causing investors to seek the security of U.S. Treasuries for this very big U.S. mortgage rate U-turn over recent weeks.

If the purchase market is all of a sudden hot again, then we can certainly say the refinance market is absolutely on fire. Make that a three-alarm fire.

Anybody who has purchased in the last year will likely find lower rates and lower payments today. That could be especially true for homeowners thinking of consolidating their higher interest rate home equity lines-of-credit and existing first mortgages into one lower rate and payment.

Homebuyers are out there again — and at all price levels.

Why? It’s a combination of increased choices as the numbers of listings across Southern California is ramping up. And more affordable mortgage payments due to rates dropping.

Two weeks ago, there were 60 new listings at the weekly San Clemente Realtor caravan. This week it was 45. In previous weeks it was running at about 25 to 30 new listings.

In Southern California as a whole, listings jumped from 32,243 last year to nearly 41,000 on March 21, according to Reports On Housing.

“We are seeing an increase in new listings,” said Gary Bridge of First American Title who co-manages the weekly meetings.

Jake Schmidt recently sold his $1.75 million Orange County home at full-price in four days.

“Rates drop, and things pick-up,” said Schmidt.

What you should be looking for are competitive pricing and top-notch service. Just because somebody quotes you something doesn’t mean it’s guaranteed.

So, reputation matters. Consider your own previous financing experiences. Did you get a good deal? Was it five-star service?

Recommendations and experiences from family and friends are always good to explore.

Hard data is tough to find but there is this: Several years of data provided by Chris Aliotta, president of Quantalytix indicates mortgage brokers have been providing lower FHA and VA rates compared to retail lenders for borrowers with credit scores of 740 or higher. Several years of data from Quantalytix show borrowers with credit scores of 740 or higher get lower FHA and VA rates with mortgage brokers than retail lenders.

To my knowledge, if you are strongly qualified and you are in the jumbo loan category (over $726,525), regional and national banks offer aggressive pricing — especially if you are willing to move $250,000 to $1 million over to that bank.

If you don’t fit the box — like you have bad credit, need to do a bank statement or stated-income type loan — mortgage brokers typically offer the widest menu.

When you do shop around, you can always compare lenders and haggle. Maybe you will end up with a better deal.

What you should never do is double-apply. You run the risk of being financially liable for the lost compensation to the lender who lost out because you picked the other lender. People expect to get paid for completed work.

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Jeff Lazerson - Mortgage Columnist since 2011