4/21/2023 – Credit Unions forced to raise rates

Mark-to-market is an accounting method used to measure the value of an asset based on its current market price or fair value. This contrasts historical cost accounting, where assets are recorded at their original purchase price. Mark-to-market is commonly used for financial instruments like stocks, bonds, and derivatives, as their market value can fluctuate frequently.

When Silicon Valley Bank collapsed, it sent shockwaves around the industry with Portfolio Lenders, Banks, Credit Unions, and others. We are now seeing some of these institutions with balance sheet troubles, forcing them to raise interest rates well above the rates of a regular mortgage company. The decision to sell assets will depend on various factors, including the institution’s overall financial health, the current market conditions, and the specific assets in question. If the institution holds assets that have significantly decreased in value and are unlikely to recover, selling those assets and taking a loss may be the best course of action. On the other hand, if the institution holds assets that have been appreciated, selling those assets may be an excellent way to generate cash and improve the balance sheet.

In either case, the institution will need to determine the fair market value of the assets in question using mark-to-market accounting principles. This will allow them to accurately assess the value of the assets and make informed decisions about whether to sell or hold onto them.

We are now seeing that some institutions have to sell assets in a tougher environment, and rates at these institutions are now considerably higher than private mortgage companies like Augusta Financial.

I was looking at a local Credit Union just yesterday, and I noticed that their 5/5 ARM they push is .250% higher than our 30-year fixed rate, and their 30-year fixed rate was .50% higher than ours. We are not a discount mortgage company working out of our house in North Dakota, but we do have competitive interest rates and way better knowledge than other institutions! Some of these institutions offered rates that needed to be higher for too long, and they miscalculated the market. Now they will pay the price!

Interest rates have been good the past few days, but still need to be where we want them to be. It will be a long road down, but people are complaining less than last year. The rates are what they are, and getting a house is the challenge in most cases.

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• 0 down California Dream for all Equity Share – Postponed until 2024!
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!
• Government Loans (FHA / VA) are in the low to mid 5’s.
• Conventional Loans up to $726,200.00 are in the mid 5’s to low 6’s.
• High Balance Loans $726,201.00-$ 1,089,300.00 are in the high 5’s and low 6’s
• Jumbo loans above $1,089,300 are in the low to mid 6’s
• 5/1, 7/1, 10/1 Arms are in the 5’s and 6’s.
• Bank statement loans - They are available with 10% down again! 7’s + depending on down and credit score.
• Stated income loans – 20% down with reserves! In the 8’s and 9’s!
• 0 down loans are in the high 5’s to low 6’s- 620 credit score min right now! Low 6’s, for the most part, up to $725,000.00.
• 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 - are typically 6.99% with limited fees – But they get you where you need to go!

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

I am around all weekend 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 me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!