Mortgage Blog

I talked to one client Friday. And he was amazed that
my blog has so much useful info and how accurately
I predicted the rates for the last a few years.

He also said that the prediction of ARM lower rate
the 1st half of this year and the bottom of the ARM
rates a few months later were so accurate. And he
wished he knew this blog earlier.

I shared with him how I can predict the ARM rates.
I think the same way as some lenders did.

At the beginning of this year, the fixed rates were
higher after Nov 4-5th, 2010 low rates(It went back
even to 4.875% for 30 yr fixed rates). And I closed
only 7 loans in Jan, and most of lenders underwriter
had so much free time and they asked me to submit
loans to them.

What should I do if I were the lender? I would lower
the profit margin to have some lower rates to keep the
underwriters busy. Then which program should I pick
if I were the lender? Since the fixed rates(tied with
long term bonds) could not be lower, the best target
would be ARM.

The lenders/investors still can have pretty good margin
for the rates over 2.5% to 2.75%. That's why I predicted
the ARM rates at the beginning of this year.

But on May 3rd, I predicted the ARM rate hits the bottom.
And it was slightly up after that.

And what should I do at this moment if I were the lender?
I will keep the rate within trading range. 1)Because
of the holiday season 2)No direction from the bonds market.
It is safe to keep it in the range. 3)Business-wise, everybody
is still busy, not much incentive to lose the profit
to attract more business.

I will talk about another more about this topic in the next
a few days.