“Yesterday’s unemployment numbers might create a scare for homeowner’s to complete their transactions, before rates head north,” were the words of Tom Smith, Senior Mortgage Broker headquarted in Sacramento. Smith has been around over twenty-five years and has originated nearly one million transactions during his career. He was asked what effect the now 7.7% unemployment rate would have on mortgage applications.
This past Thursday, Freddie Mac published its weekly rate survey which saw rates edge up a notch to 3.520%, up a mere tenth of a percent from the previous week of 3.510%.
"The biggest problem for my clients is finding enough inventory."
Smith specializes in clients who are purchasing a home. Despite historically low rates there is evidence across the nation that the housing sector is recovering. As positive economic news is presented it helps builds the all-important consumer confidence. The result is a more robust supply and demand cycle or increased competition.
Out of fear from not capturing low rates, consumers can get jittery in snapping up available properties. Smith warns consumers not to panic. “While a segment of the market is showing positive signs, the current rates signal very good activity as we enter the spring season. Aside from finding property my other critical concern is making sure clients are thoroughly educated on underwriting guidelines, so they are prepared to deal with the gauntlet of documentation request lenders have established. It’s not that clients can’t qualify but the days of sketchy documentation are over! That is, if they are serious about closing their deal.” Smith lamented.
The unemployment news is great on the political side as well as those who have joined the labor force. It translates into more people gaining income, which will increase consumer spending. Lenders and real estate professionals are monitoring these metrics very closely because even though unemployment numbers are down, a sharp increase in rates could reverse momentum from the low mortgage rates consumers have enjoyed for the first quarter of the year.
Other rates in the survey, which were nearly unchanged from the previous week included:
- 30 Year Fixed Rate - 3.520%
- 15 Year Fixed Rate - 2.760%
- 5/1 ARM - 2.630%
- 1 Yr. ARM - 2.630%