If you were among the multitudes calling your lender last week when mortgage rates dropped, you may also have been disappointed when you finally got through. On the heels of the FED’s historic 3/4 point rate reduction mortage rates temporarily dropped to as low as 5.125%. [See the LA Times Article “Interest-rate drop spurs frenzy of refinancing calls”.]
But something happened while you were on hold listening to elevator music. The calls were coming in unprecedented volume. In the past, mortgage lenders would rejoice, taking down names and requests and go about hiring new personnel to handle the volume. This time, the lenders view the volume with great caution. They will do the deals they are equipped to handle, but are unlikely to start hiring back all the people they just layed off over the last 6 months. Why? There is no long term solution/replacement to the loss of the sub-prime and/or non-conforming securties market. What this meant to the callers that didn’t get through first was the steady climb in fees and rates throughout the week. This is the lenders’ way of slowing down the flow to that which they can handle AND raising the profit margin for the deals they put together.
Right now, after 6 months of attrition and downsizing, lenders are not about to start looking for additional office space and employees. They will try to earn more per transaction. As such, shopping around is now more important than ever. The differences in rates and fees may be dizzying, but worth sorting through.
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