Mortgage Blog

I still have some borrowers will think that
ARM rate will go down with the stock market.
It will not go down.

For some people, whne they take a look at the
rates, they only consider stock/bond market,
or mortgage backed security. But there
are other factors. My prediction is better
than most of the other people is that
I consider those factors. Here are two of them:
1)Competition
2)Lower the profit margin.
And above two can be the same in the most cases.

For the last two or three months, the lender
PF has very low ARM rates, partially because
of their investor's interest; partially because
of the "high" interest rate, so they have
more business with those rates.

Will they have very good business? Yes.
Will they make more money. Maybe not.
Why? The profit margin is low.

Ok. For the last two or three weeks, when the
fixed interest rates were lower. If you were
the management or owner of the company, will
you get such low rates(low margin).

For the common buisness sense, I will not.
Why? Because I don't need those program
to "generate" business. We can now have lots of
business from 30 yr fixed and 15 fixed.

And one more factor, the diversification.
For the investor, they will purchase more
ARM loans if they have enough percentage
in their portofolio.

As for the fixed rates, I am thinking about my
strategy for the next half year when those rates
are indeed lower.

Have a good weekend.