WeeklyBasis 06/05/06: How Low Will Brokers Go?

I took a break from MarketWeek since last Monday was a holiday, and good thing too. It was a gloomy rate week up until Friday’s job growth came in way below Wall Street estimates and pushed rates down by about .25%. I’m showing zero-points rates on core programs below. But it’s a slow data week and rates should be pretty stable. So I thought I’d touch on a key question I’ve been hearing lately: how low will brokers go? Mortgage brokers are compensated either by charging points or taking the spread between an institutional rate and the rate we offer borrowers. I have watched spreads thinning in recent months, and even still, I’m locking below my published rates in most cases. Everybody wins: homebuyers beat the market, Realtors know who’s really willing to take care of their clients while the market transitions, and I don’t lose relationships. Pretty simple.

In a period of 2 weeks, the market has gone from fearing inflation due to strong economic growth to a trading sentiment centered on a possible economic slowdown. This is good for rates. Stay tuned to see if it lasts.

Conforming ($200,000 – $417,000) – NO POINTS
30 Year: 6.5% (6.64% APR)
10/1 ARM: 6.375% (6.515% APR)
5/1 ARM: 6.25% (6.4% APR)

Jumbo ($417,001 – $650,000) – NO POINTS
30 Year: 6.625% (6.765% APR)
10/1 ARM: 6.5% (6.4% APR)
5/1 ARM: 6.375% (6.525% APR)