1/18/24 – Interest rate trends – Mariposa is dead!

Every once in a while, I get bored, and I start to look at numbers and geek out on what I see, and then I like to share it with the fine people of this community.

From the mortgage meltdown to the pandemic, 2009-2019, interest rates averaged 4.185%, with the lowest year being 3.65% in 2016. 2020 and 2021 came in at 3.17% and 2.96%, respectively, followed by 2022 at 5.34% and 2023 at 6.81%. So, the last four years averaged 4.32%, and in the last 14 years, we have averaged 4.59%.

Here is what I am getting at, and yes, I am leaving out data before 2009 because that was a long time ago. LOL!

In speaking with clients, I use the above to show them that interest rates averaged 4.185 from 2009-2019 before the pandemic. Then we got a two-year average in which rates dropped to around 3%, and then we came back with much higher rates for two years, but I don’t see rates staying here for long. Over the past 14 years, we have averaged 4.59%, so these rates in the 6’s will not last forever. We will find a sweet spot where you can refinance your home and get into a rate in the 3’s or 4’s! Start with where we are now, pay 0 points, and we will review your file every quarter and see if it is worth doing a no-cost refinance! If we start you at 6.75% today and refinance you to 6.00% in 6 months and then a year later we get you to 5.250%, we are one step away from being in the 4’s, and 2026 or 2027 will likely be the year of the 4’s!

I can’t guarantee that the rates will get to these points, but look at the past history, and if you ever took a deductive reasoning class, you would think, as I do, that rates will average in the 4s over the next ten years.

When I speak with my clients and send them an email with payments, I always finish with this:

Interest rates are trending downward, and most buyers are looking to buy now before prices increase further. When rates do go down, you can expect the following savings when you refinance:

When rates drop by 1%, and you refinance, your monthly payment will drop by $386 – $472

When rates drop by 2%, and you refinance, your monthly payment will drop by $752 – $902

When rates drop by 3%, and you refinance, your monthly payment will drop by $1098 – $1316

The above is based on a 750-900K Purchase price with 20% down.

You want your clients informed with the right information, not just today’s rates! Otherwise, they will stay put and rent forever! Allowing them to use the wrong lender could be detrimental to your business!

Please notice I added Mariposa to the "nobody-can-finance" list!  

Condo / Townhome issues we know of now. Properties can be financed with 10% down and are considered NON-WARRANTABLE:

1. Scenic Hills – Insurance
2. Bouquet Canyon Village – Insurance
3. Madison – Litigation – I heard an FHA loan closed in there! I am trying to find out if it is an underwriter error, or will it be okay to do FHA loans there?
4. Cornerstone – Insurance
5. Canyon Oaks – Insurance
6. Brookside Walk – Insurance – NEW as of last week
7. Shadow Ridge – Oak Park – Insurance
8. Sierra Glen Condos – Insurance
9. American Beauty Condos – The brown ones – Insurance – 50 Mil in coverage for 748 units is not nearly enough!

The condos below are likely not financeable if the Insurance is why they are on this list! Lenders will say they can do these, but they will likely spin their wheels and frustrate everyone!  

1. Mariposa – Insurance – Just downgraded 1/17/2024 
2. West Creek and West Hill Valencia, CA - Insurance
3. American Beauty Village, Santa Clarita - West has insurance issues – East will get renewed on February 28, 2024, and supposedly will have enough Insurance, so that is good news!
4. Cabrini Villas, Burbank - Maybe able to do 10% down, case by case! Please provide a specific address & LTV & occupancy.
5. Morada, San Diego - Insurance issues.
6. Parkwoods, Oakland - Insurance issues.
7. The Summit, San Diego - Insurance issues
8. Bridgewater, Emeryville - Insurance issues
9. The Met at Warner Center, Woodland Hills - Due to the project size, we can lend with 10% down on the project side that is on Burbank and Owensmouth. They are no longer lending for the project section on Canoga.

Please let me know if you hear anything new on condos or townhouses.

Rates are struggling a bit this week. Nothing earth-shattering, but they moved off their lows a couple of weeks ago and are finding their direction.

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• We do loans in all states, so call me with anything you need.  
• Government Loans (FHA / VA) are in the high 5’s and low 6’s
• Conventional Loans up to $765,550.00 are in the low to mid 6’s
• High Balance Loans $765,550.00-$ 1,148,325.00 are in the mid to high 6’s
• Jumbo loans above $1,148,325 are in 6’s
• Bank statement loans - They are available with 10% down again! 8’s and 9’s depending on down and credit score.
• No income qualifier – 40% down with reserves! In the 8’s!
• 0 down loans are in the high 7’s – 660 credit score min right now, up to $740,000.00.
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - typically 7.500% with limited fees – and they get you where you need to go!
• 0 down California Dream for all Equity Share – Postponed until February 2024???
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!

Interest rates are subject to change without notice! Above are LA County Loan Limits.

I am available all weekend, so please call me if you need anything. Be careful in the rain and let me know if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. Please text (661-714-6258) or email me at Mike@AugustaFinancial.com.

Have a great day and an even better tomorrow! Please call me when you have a client who needs to borrow!