Interest Rates Torpedo Refinancings

MortgageAll of this was supposed to be a thing of the past. You know, no mortgage brokers stringing their customers along while they waited for rates to get better and pad their bottom line, everyone getting exactly what they were promised a new, kinder and gentler mortgage market.

Guess what. It didn’t happen. When rates kicked up suddenly this week a lot of homeowners who had refinance applications in process discovered that it might not even pay them to go ahead with the transaction. Whether they failed to lock their rates out of greed (hoping for even lower rates) or got talked into letting things float by some slick salesman who was looking to make an extra dime or two on the backend the uptick rendered a lot of the rationale moot. They just weren’t saving enough money to justify the expense.

A blog called Field Check Group has done a good if sometimes a little bit too hyped job of reporting the carnage. One interesting tidbit on their blog is that the loan officers are now pushing 3/1 and 5/1 interest only ARMs as an alternative to a 30 year fixed rate loan.

Yikes! Have we learned nothing?

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About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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