Mortgage Blog

Herd mentality

May 26th, 2015 1:11 PM by Eric Fang

I chatted with a realtor yesterday and discussed about the purchasing market. There are some interesting facts that the purchases from first time buyer were up a little bit recently. We were surprised that why they did not purchase when the price was low.  And he told me that this is Herd mentality. And it happened all the time.

And I shared with him another story. Once I had a client who locked the interest rate for 1 year( 1 Year ARM), and the rate will be adjusted annually after that. But the rate he got was indeed very low, compared to the other ARM or fixed rate. The only thing affected his life was that he would call me and asked me to do a refinance when the interest rate went up. And he would not want to do it once the rate fell back again. It is against the common sense of most of the other people. But he wanted to take advantage of the market. So I told him it was not worth because of the pressure from the market.

 And believe it or not. I would have more refinance when the interest rate went up a little bit again(in the future). Normally it would happen when the interest rate have a big jump(like 0.5% to 1%), and when it is back lower, then a lot of people would do a refinance before it go higher again.

It would be the same for the RE market. If the interest rate goes higher a little bit, it might trigger the purchasing as well. We will wait and see whether this will be true or not.

By the way, I floated three ARM loans, one for Jumbo 7/1 ARM 2.875%; another for HB 5/1 ARM 2.75%; HB ARM 2.875%. I am still "underwater", but I think I should be able to close them within a month. Let's wee.

I will run San Francisco Marathon in two months. I do not think I can BQ with this hilly course. But I still plan to have a PR. So I will try my best for the training.
Posted in:General
Posted by Eric Fang on May 26th, 2015 1:11 PM



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