Mortgage Blog

The possibility of 2.5% for 15 yr fixed(no closing cost)

September 16th, 2012 3:05 PM by Eric Fang

When I was young, I would say the possibility is -.01%.
And When was getting older, I would not say the possibility
is 0%. But I think It would be safe to say the possibility is
less than 1%.

While the Fed Rate is 2%, the lender can only do the rate
for 5/1 ARM with 2.375% or higher. Most lenders can not do
rates lower than that, only those who can originate the loans
with cu-to-the-bone margin. When the rate is so low, I don't
think any lender would like to do "low profit margin" loans
any time soon. So the 5/1 ARM 2.375% to 2.5% rate is the bottom.

For 15 yr fixed rates, it is usally higher than most
ARM programs(3/1 ARM, 5/1ARM), and current its already lower
than 7/1 ARM, 10/1 ARM rate. There are not much room
for going down. If there are any, I believe 2.625% will
be the bottom. And at the current market, there is no bonds
traded for this rate. How can we have any rates below 2.75%?

30 Yr fixed rate is a little bit different story. The lender can
squeze the margin to lower the rates around 3.25%. For any
lower rates(if possible), we need the bonds coupon available
as well.

Posted in:General
Posted by Eric Fang on September 16th, 2012 3:05 PM



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