Mortgage lender LoanDepot has let go of 2,800 employees this year and announced another 2,000 layoffs are on the way...big banks JPMorgan Chase, Citigroup and Wells Fargo have shed hundreds of mortgage broker positions.”
What mortgage companies and homeseellers could do is to escrow say 10 years of interest rate buydowns, so an interest rate of say 5.1% becomes 3.9%. This would require about 12% of the selling price be put in escrow.
You might ask why would sellers give up ~12% of the selling price.
They would be taking a bet that the Federal Reserve can’t force the federal government to pay a competitive rate of near 5.1% on borrowed money for ten years.
I believe it is a good bet, and better than just cutting the price ~12%.
The real estate agent might also be asked to chip in the interest rate buydown escrow account.
The buyers might be required to refinance if say interest rates fall below say 4%.
“They would be taking a bet that the Federal Reserve can’t force the federal government to pay a competitive rate of near 5.1% on borrowed money for ten years.”
Bond investors, aka bond vigilantes, wield more power than the Fed if they act in concert like they did during in the late ‘70s, early ‘80s. The vigilantes routinely unloaded bonds when they didn’t like the weekly money supply numbers, driving up interest rates.
I just refinanced witha big ass company I would never deal with again.my rate was 3.35%.THey just sent out a letter that probably went to all borrowers that the current rate is 7.1% and rising every week.