The Latest on Rates: Hurry Up and Wait… But Talk to a Broker

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Fed Chair Powell was in the press again last week, and not because of being verbally bashed by Donald Trump. Instead, in a speech at an annual economic event, he suggested that the Fed will indeed be considering a cut in short-term rates. While markets are largely pricing in an interest rate cut from the Federal Reserve in September, homebuyers, and our brokers, should not expect mortgage rates to follow.

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Orion’s brokers know that late August is usually a slow time for housing activity, with people on vacation and/or preparing kids to return to school. Most families that had planned on moving during the summer already have. With mortgage rates now falling slightly on news coming out of the Fed meeting in Jackson Hole, the market could actually get a little less sluggish in this late-summer season. The market is anticipating a September interest rate cut by the Fed. That’s already being priced into mortgage rates, which could pop back up depending on how the jobs and inflation reports come in early next month. In other words, mortgage rates are unlikely to fall further after the September 17 Fed meeting, if even then.

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How Orion Handles Mortgage Rates

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We pride ourselves on products to fit your clients as well as superior customer service. But in terms of rate, Orion is often compared to, and shopped against, on-line lenders. With the many real estate websites and apps available today, it’s easy to think your clients can click around on the web to find all the information they need. But in many cases, as brokers know, the available online data is misleading, outdated, or plain wrong.

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Orion specializes in loans for millennials and other first-time homebuyers, and our AEs see this often: A young couple finds the “latest” mortgage rate on a popular real estate website and then asks a broker, “I see a rate of 5.5 percent - can you get that for me?”

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Economy on Mortgage Rates

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‍Brokers spend a good chunk of their time telling clients that the rates found on websites don’t always take into account the type of loan and its terms as well as the buyer’s credit score, down payment, and debt-to-income ratio. In fact, our brokers usually explain these terms to your borrowers. Real estate agents often face a similar challenge when a homeowner goes online and sees what their home is “worth,” but real estate websites don’t always take into account factors like the condition of the house, or future developments… For example, a lard rendering factory planned for construction up the street.

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The internet is a great resource, but it’s not perfect, and filled with flawed information. That’s why, to determine the actual rate available, top Realtors encourage their clients to work with a licensed mortgage broker. An Orion AE has tools to help brokers determine the exact rate for an individual buyer. Keep in mind: rates change all the time, even several times on the same day, so your client can’t always trust numbers you see online.

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Brokers work with clients on information sometimes not disclosed by on-line lenders: Is there an origination fee associated with the loan? What is the APR, or annual percentage rate? What are the closing costs? Every home buyer should take the extra time to work one-on-one with a broker to understand their qualifications and individual rate, as in the mortgage world, the old-school approach is the smart way to go.

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Before your clients call off their end-of-summer vacations and hit the open houses, they should talk to a trained broker beforehand. And brokers: Don’t assume that an interest rate cut in September by the Federal Reserve will cause mortgage rates to fall. The bond market, not the Fed, dictates 30-year and 15-year mortgage rates, and these could very well move independently of something that the Federal Reserve does. Regardless, Orion will be there for you and your clients.

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