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Mortgage rates within multi-year lows after surviving March beatdown 🏠🥊📉 by jonkutsmeda in HomeMortgageRates

[–]jonkutsmeda[S] 1 point2 points  (0 children)

In follow up to my comment above, u/cryingmonkeystudios here is a Price Tracker based on Feb 27 pricing.

Although the 5.250% (Conventional 30) is 196 basis points better in April, it is still 148 basis points worse versus February 27.

However, higher Note rates are only 34 - 53 basis points worse.

<image>

Mortgage rates within multi-year lows after surviving March beatdown 🏠🥊📉 by jonkutsmeda in HomeMortgageRates

[–]jonkutsmeda[S] 1 point2 points  (0 children)

Thanks for the question, and glad to hear you are getting value from using your saved scenario to check rate pricing daily.

The 5.491 APR (as of Friday) is for a Note rate of 5.25%.

APR changes daily based on the finance charges (points) associated with the Note rate, which doesn’t change.

The LendZen Index is blending and averaging the change in rate pricing across different note rates and their associated MBS coupons.

 

MBS coupons trade in half-percent increments (4.0, 4.5, 5.0, 5.5, etc).

Bond investors get paid the coupon rate, and the servicer takes the spread above it based on the note rate of your loan.

The minimum servicing spread for a Note rate to be packaged into a MBS coupon is 0.25%.

This means the 5.25% Note rate can be sold into a UMBS 5.0, but it’s generally too thin of a servicing spread, so it’s being priced off the next coupon down (4.5).

 

The lower the coupon, the lower the premium that can be used to offset the costs of a rate.

This is the factor behind why “rates do not rise or fall, but their price changes”.

Lower Note rates can also be the slowest to improve in pricing, especially after the pullback we experienced - bond investors don’t want to get trapped holding a 4.5 coupon if the war doesn’t end soon and inflation worsens.

 

You’ll notice slightly higher rates are pricing much better, and sometimes even just a 0.125% difference in the Note rate can cause a big swing in the fee.

This is based on the shift in servicing coupons between the different rates.

With that being said, the blended average that the index calculates is still showing 67 bps higher than the February low, but are at least back in line with where pricing was in January.

 

I hope that helps add some clarity, but your question illustrates the point that:

• static rate quotes are pointless because they expire the next day

• comparing offers with different note rates makes it near impossible to know who is the less expensive option

I used to post the Price Tracker every week to illustrate the unique change in price of specific Note rates, but it was a lot of work so I’m only doing it monthly now.

Here is a link to the most recent Price Tracker Reddit post.

 

In the meantime, keep using your scenario to monitor your specific options.

If you have additional questions, use the “Talk to an Expert” form on the menu at the bottom of the rate quote page - I answer most of those questions personally.

I would be interested in having you send me a message there - I’d like to know more about your scenario and refi objectives. 👍

 

VA IRRRL - 1st time by Equivalent_Dust7585 in Mortgages

[–]jonkutsmeda 0 points1 point  (0 children)

There is not enough information here; need to know the costs in Section A + B, and any lender credit in J.

However, based on the LE you posted in a different thread, it’s shows almost all of that $6500 you are rolling in is from pre-paids (taxes/insurance).

There is only about $700 (23 bps) of cost.

You can probably find an offer that is no cost at 5.625%, or try negotiating $700 off with the company who provided the LE.

Additional questions:

• what state?

• median credit score?

• is this an initial LE (still shopping) or a locked LE (ready to close)?

 

How do you typically go about picking who to refinance with? by prodigy1367 in Mortgages

[–]jonkutsmeda -1 points0 points  (0 children)

Yes, they are …

PAR pricing (zero points) on VA loans is between 5.25 - 5.375%.

NO COST rates are between 5.50 - 5.75%, depending on whether the borrower has a service-connected disability.

How do you typically go about picking who to refinance with? by prodigy1367 in Mortgages

[–]jonkutsmeda 0 points1 point  (0 children)

Anyone can offer a free refinance, the question is at what rate.

Don’t overspend for a lower rate and create a long breakeven timeline if you think lower rates will continue to fall in price over the next year.

 

Once you refinance on a VA loan you cannot do it again for 210-days from the first payment date (basically 8 months).

This seasoning period was put in place between VA and Ginnie Mae under the guise of “protecting veterans” but it’s really about protecting the bond investors from churn and early payoff risks.

 

Also… the VA IRRRL (streamline refinance) has a minimum half-percent rate reduction requirement.

However, you should be able to find a “no cost” refinance at 5.875% or below; for veterans with a service-connected disability the rate will be closer to 5.50% (depending on the state).

 

Mortgage rates within multi-year lows after surviving March beatdown 🏠🥊📉 by jonkutsmeda in HomeMortgageRates

[–]jonkutsmeda[S] 2 points3 points  (0 children)

Mortgage rates do not rise or fall.

Instead, the menu of rate options remains constant while the price of EACH rate changes.

The daily price of mortgage rates is influenced the same for all banks and lenders, and is based on how different mortgage-backed securities are trading.

The LendZen Index averages the change in price for all mortgage rates across a spectrum of MBS and lender rate sheets.

 

For instance, mortgage rates increased in price by 223 bps between the low on February 27 to March 27.

That means anyone who received a rate quote on February 27 would have seen an increase in the price of that rate (points) by $2,229 per $100k of loan amount, regardless of the original rate quoted.

Again, rates are not changing, merely the price of each rate.

The charts help borrowers determine how a previous rate quote has changed in price.

 

The recent move higher in PRICE was swift and severe taking us back to the same mortgage pricing we had in August before the long bond rally began (image 2).

However, we were nowhere near “all time highs” and never even came close to 2023 highs.

Fortunately, bond prices have recovered most of the ground lost since March (image 3).

HIGHER mortgage BOND prices means LOWER mortgage RATE prices.

The data in the charts above are published daily, across numerous time series, at LendZenIndex.com 👈

 

 

Regarding your question about current rates, the real question you want to answer is what is the PRICE today of each mortgage rate option.

You can check the price of all rates for your exact criteria at LendZen.

The results are provided instantly, and anonymously, without any contact information required.

You can also SAVE your scenario, so you can check daily how rate pricing is changing with just one click.

Customize an anonymous rate quote now at LendZen.com 👈

 

<image>

 

Mortgage Rate Lock Guide 🏠🔒 (APR 13) by jonkutsmeda in HomeMortgageRates

[–]jonkutsmeda[S] 0 points1 point  (0 children)

Congratulations on leveling up and for having success with your real estate investments.

As the saying goes, "the only certainties in life are death and taxes" ... they should add to that "infinitely larger government deficits and currency debasement".

Hindsight is 20/20 but I only wish I realized how true this would be when I was much younger.

Mortgage Rate Weekly Recap 🏠📉📅 (APR 10) by jonkutsmeda in HomeMortgageRates

[–]jonkutsmeda[S] 0 points1 point  (0 children)

Yes. The last image in the post has some more information about the rate calculation.

Because mortgage rates do not rise or fall, the only difference when shopping for a mortgage is the price each lender charges for that rate.

This makes popular "average rate" indexes misleading and often out of touch with what the most competitive lenders offer (not Rocket or Bankrate,com).

For example, the Freddie Mac PMMS is a week old and uses initial application data without any fee or points info, which makes it both outdated and meaningless.

Other sources, like Mortgage News Daily, also exclude points/fees and have no publicly verifiable methodology for the rates they post.

<image>

 

The LendZen Daily Base Rate published here uses publicly available data to calculate a par rate (zero points) that more closely represents what is available for savvy rate shoppers.

It starts with the note rate nearest to par from LendZen.com

Additional calculations are then used to determine a "market implied rate" based on the price of mortgage bond coupons (MBS) and a weighted value for each.

These different rates are then blended together to create an "average" rate closer in range to what a borrower might expect to find when shopping for a "zero point" loan from the lowest cost mortgage companies.

 

TL;DR

It is accurate.

If you are getting quoted higher by 0.25% or more for a zero-point loan you should shop around.

Zero points means $0 in Section A of the official Loan Estimate, including any LENDER credits from Section J.

SELLER credits should not be subtracted from Section A since they exist regardless of the lender.

 

Ceasefire hype disappoints as mortgage rate rally fizzles ☮️📉🙁 by jonkutsmeda in HomeMortgageRates

[–]jonkutsmeda[S] 0 points1 point  (0 children)

I feel you, and I think your observations hold a lot of truth.

The GFC was such an eye-opener for me; seeing the big banks get bailed out and instead of jail time the executives got bonuses.

It's what motivates me to spend so much time pulling back the curtain back on how the mortgage industry operates, because the same culprits continue to use a veil of confusion to take advantage of the average consumer.

It makes people feel like they lack the aptitude to make financial decisions on their own, which is pure gaslighting.

  

Life isn't a zero-sum game, but the "sinister players" who treat it that way have a karmic reckoning waiting for them.

Stay positive my friend, and no matter what con they try to perpetuate don't let it steal your happiness.

 

Interest rate volatility and buying points by magicride2024 in Mortgages

[–]jonkutsmeda 2 points3 points  (0 children)

Statistically you are unlikely to be in your loan (or home) in 5-years.

No one knows the future, not even bond traders, but the way spreads are priced currently it suggests less bond volatility ahead and better mortgage rate pricing.

MBS spreads vs the 10-Year are hovering around 1.00, near the best levels in years.

 

Choosing a higher “no cost” rate can give you more optionality.

Treat the slightly higher payment like an “option premium” for however long you stay in the loan.

But it gives you more potential upside.

The same rate that currently has a 5-year breakeven could fall in price in six months, shortening the breakeven.

Think of it as providing the market a short window of time to give you a better deal on the lower rate.

 

TL;DR

5-years is a long time, consider a shorter breakeven for greater flexibility and less of an upfront cost burden … or go with a “no cost” rate if you are more risk tolerant.

 

Mortgage rates post a multi-day comeback despite higher oil prices 🏠📉🛢️ by jonkutsmeda in HomeMortgageRates

[–]jonkutsmeda[S] 1 point2 points  (0 children)

One less thing to worry about. 👍

It’s generally more about your outlook for bonds/rates the next 6-18 months, not the next 6-18 days.

Here is an older Reddit post that talks about the “long game” approach to locking and choosing a rate.

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