Something interesting happened last week in the world of mortgage lending, something typically only seen in the airline industry. The nation’s largest wholesale lender (a lender that derives all of its loan volume through mortgage brokers) dramatically lowered its interest rates in an attempt to attract business from brokers that don’t currently send business their way and take market share away from the other large lenders in the wholesale lending channel.
Act now, rates will likely be short-lived
As expected, and in line with what we typically see with airfares, other wholesale lenders moved in lockstep. Rather than sit idly by and watch market share be taken away, at least one of the other large wholesale lenders quickly lowered their interest rates as well, and others are expected to follow suit soon.
For lenders, these interest rate cuts mean a potential loss of money in the short term as most lenders operate on thin margins to begin with. Therefore, it is likely that these rate cuts will be short-lived and rates should normalize in the not too distant future. For consumers, however, these rate cuts have provided an unprecedented opportunity that should be taken advantage of.
Lower interest rates offer big advantages for prospective and current homeowners
The lower interest rates being generated through this “rate-war” afford you, the consumer, a few key opportunities. First, you can lower the interest rate on your current mortgage and enjoy a lower monthly payment moving forward. Second, you could lower the term on your current loan, meaning shorten the number of years remaining on your loan, often while maintaining the same payment you currently have. Lastly, these lower rates allow you to take equity from your home to complete those long-wanted improvement projects, get money for education expenses or pay off nagging credit card debt. These interest rate cuts occurred across all loan types, including FHA and VA loans.
Many consumers took advantage of the extremely low-interest rates offered over the past several years and may not think it is worth giving up the interest rate on their current loan. That line of thinking is very understandable. However, if you have been thinking about purchasing a new primary residence or investment property or fit into one of the potential refinancing opportunity categories outlined above, then it may be in your best interest to contact us today to do a “mortgage check-up” and see what opportunities may be available to you.