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Rainer
267,296
Caroline Gerardo
Pinnacle Home Loans - Newport Beach, CA
C. G. Barbeau the Loan Lady nmls 324982

Fed funds rate is not the mortgage rate, it's what they loan overnight. the secondary market (the hedge funds, Wall Street, pools that are not our government) are squeezed and they all retracted- some had margin calls some had warehouse lines cut by half or more. They laid off their staff. Some will close their doors, file BK if this carries on. Many will merge and return when the market stabilizes. All the NON QM lenders have closed, leaving the CEO, an attorney and maybe two accountants deciding what to do. This is a hundred thousand employees. The only real "player" in the secondary market standing is our government. Fannie Mae and Freddie Mac will buy conforming (the small ones) loans as these have lower risk. Pricing under $484000 is decent. High balance loans jumped up in rates- its really hard to package these with a big lump of business. To 'make' a loan depends on about 100 services all of which went to work from home platforms that they are not accustomed. Appraisers average age is 64 (they have to go inside and some of these are being waived with a rider signed by the borrower to allow them to come back in the future and videos are used). Rates went up to slow down the flow of demand. County recorder offices in some states allow e-recording and some are not allowing recording, that's a tough one. Notaries are done in person and they touch the hand of the person being fingerprinted (imagine that work around - there now is one). All the servicers are asked to pay for forebearance in the Cares Act with no specific rule to implement only suggestion and no where to get the money provided. 

I can close a conforming loan in 21 days in the 3's but all the jumbo product over $726250 is difficult and they made new stricter rules. All loans now have higher FICO score requirements as everyone sees the grey sky ahead. Self employed borrowers cannot use rental income unless they have lots of cash reserves, and income is reduced by 25% because the market assumes we are in for trouble ahead. The good news is- THIS WILL PASS. Nothing terrible lasts too long. The market will recover and the players will reorganize. It takes lots of communication and planning for us to work together, but deals will close. I recommend that borrower Not to pay big points or borrower paids as we may see the dip in rates ahead when everyone is full speed ahead. Meanwhile wash your hands with big bubbles. 

Apr 05, 2020 05:26 AM
Rainmaker
3,556,920
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Purchasers of mortgage backed securities are leary. Less demand,  higher pricing!

Apr 05, 2020 05:06 AM
Rainmaker
865,417
David Popoff
DMK Real Estate - Darien, CT
Realtor®,SRS, Green ~ Fairfield County, Ct

The resulting uncertainty has made it more difficult for lenders to evaluate the level of risk associated with loans. Additional underwriting requirements are being added, complicating the approval process. Industry officials expect that over time the system will gradually return to more normal conditions, especially as the government clarifies the process for mortgage firms to handle the period of forbearance.

Apr 05, 2020 05:14 AM
Rainmaker
991,192
Thomas J. Nelson, Realtor e-Pro, CRS, RCS-D, Vets
Big Block Realty 858.232.8722 - La Jolla, CA
& Host of Postcards From Success Podcast

YES, basic economics at work,

so it makes a lot of sense and here's "the why": YOUR ANSWER

Apr 05, 2020 04:07 AM
Rainmaker
811,280
Annette Lawrence , Palm Harbor, FL 727-420-4041
ReMax Realtec Group - Palm Harbor, FL
Making FLORIDA Real Estate EZ

Because mortgage rates are not based on the Fed rate, 10 year bonds or Dow Jones averages. 

Mortgage rates are determined by:
1. Who the banks are able to sell their mortgages to and what they require.

2. The banks/originator need for new baseness. Banks can jack the rate up to discourage business (swamped) or line their pockets.

Right now, both #1 and #2 are imposing influence. Couple that to uncertainty for the next 60 days and you have the ingredients for a cessation of business, including real estate for a while.

 

Apr 05, 2020 08:08 AM
Ambassador
1,716,333
Alan May
Jameson Sotheby's International Realty - Evanston, IL
Helping you find your way home.

our current situation makes forecasting economics incredibly difficult.  lenders don't know what the landscape will look like once the smoke clears... they won't know what rates look like, they won't even know if the borrower will have a job... so they're hedging their bets by raising their rates..

Apr 05, 2020 06:50 AM
Rainmaker
494,791
Greg Cremia
Shore Realty of the Outer Banks - Nags Head, NC

Because they can.

Apr 05, 2020 05:03 AM
Rainmaker
578,342
Tony Lewis
RE/MAX of Valencia (Hall of Fame) 30 year Valencia Resident - Valencia, CA
Summit Real Estate Santa Clarita & OC Laguna Nigel

The mortgage rates are rising since funds are becoming more scarce.

Apr 05, 2020 06:56 PM
Rainmaker
1,296,312
Ryan Huggins - Thousand Oaks, CA
https://HugginsHomes.com - Thousand Oaks, CA
Residential Real Estate and Investment Properties

Because the Fed rates have no correlation to the mortgage rates.  Two completely separate rates.  Fed is the rate banks get charged when borrowing from the fed.  Mortgage is what YOU get charged for borrowing from the depositors/investors at the lender.  It is also directly related to the amount of risk the banks see in the market.  Many are raising rates due to increased risk, while others are ceasing lending operations all together.  Many FHA, VA and Jumbo loans have gone off the market in the last two days.

Apr 05, 2020 09:42 AM
Rainmaker
2,869,394
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

The short answer is because they can. 

Behind that is uncertainty during these challenging times. 

The ultimate goal is greed and massive profits. 

Apr 05, 2020 09:32 AM
Rainmaker
1,989,273
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

You are not getting a zero percent loan from a bank... and what they charge is tied to the lending rate the Fed establish. It takes time just like when oil productionn is cut so many thousand barrels. The price you and I pay to fill 'er to the brim goes up and down accordingly. Back in the 1980's when rates dropped and you already had a mortgage, a change of rate started with just a written request. I sent Machias Savings Bank a letter that in light of lower interest rates, a rate reduction I felt was in order. Basically, they were going to lose this mortgage to another bank offering better terms. For $500, no new appraisal, no title work, just that letter the rate was dropped two percent. Get the best rate you can, pay principal payments as you can and remortgage when there is an opportunity any way you can. Take advantage of whatever rolls your way.  We will get through this and lots of good things happen to tighten up what should have been anyway for slack in your life, real estate operations  Denise Copeland !

Apr 05, 2020 05:55 AM
Rainmaker
1,727,003
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co. Notary Services, retired Realtor

David Popoff gave you a great answer Denise Copeland . I always told clients that the Fed does not set mortgage rates when I was asked. This is why I always encouraged them to check around BUT also that the lowest rate doesn't always hold a candle to the service a local lender may provide.

Apr 05, 2020 05:44 AM
Rainmaker
3,157,609
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

In short, the uncertainity has some lenders pausing but there is a great increase of re-finaces which is driving rates up based on supply and demand. It will pass though as the higher rates stopped new re-finace applicaton in their tracks. . 

Apr 05, 2020 02:09 PM
Rainmaker
5,771,289
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

The fed rate is not the mortgage rate.

The answer from Google...which you should be using...

The Fed doesn't actually set mortgage rates. Instead, it determines the federal funds rate, which generally impacts short-term and variable (adjustable) interest rates. ... Those higher costs may be passed on to consumers in the form of higher interest rates on lines of credit, auto loans and to some extent mortgages.

Apr 05, 2020 12:53 PM
Ambassador
2,946,627
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

short term and mortgage rates aren't the same thing is the simple answer.  Obviously it's much more complex than that, I'd suggest having a local loan officer you like explain it to you.

Apr 05, 2020 12:41 PM
Rainmaker
1,601,154
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

I wish people would learn how our money system works & where mortgage money comes from.

Apr 05, 2020 11:46 AM
Rainmaker
762,764
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Mortgage rates are going up for two reasons:

1. The financial market hates confusion and lack of predictability.

2. Lenders are swamped with loan applications for purchases and refinances. They lack the capacity to service all requests properly so they are taking the opportunity to maintain rates somewhat higher than they should in order to tamp down requests to a more manageable level. 

Apr 05, 2020 09:24 AM
Rainmaker
2,545,684
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Greed...

Apr 05, 2020 09:10 AM
Rainmaker
1,907,026
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

They are action a Roller Coaster ride 

Apr 05, 2020 07:24 AM
Rainmaker
4,818,778
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Denise,

Your question was answered by savvy lenders on AR.  Wishing you all the best.  A

Apr 05, 2020 07:05 AM
Rainmaker
2,730,905
Debbie Gartner
The Flooring Girl - White Plains, NY
The Flooring Girl & Blog Stylist -Dynamo Marketers

I would assume because there is much higher risk in the system (i.e. concerns that people will default). it makes sense as people continue to lose their jobs and/or are making less if their income or portions of it are variable.

Apr 05, 2020 06:17 AM
Ambassador
3,677,871
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
The right Charlotte REALTOR!

Apples & oranges, Denise. 

Investors are dwindling, lenders are cherry-picking and supply and demand is in play here when it comes to mortgage products/rates.

Apr 05, 2020 10:10 PM