Mortgage rates are changing every day – and those changes can have big effects on borrowers. Over the last year, it seems that most of those changes have taken an upward trajectory, but there are times that monitoring mortgage rates means good news, such as the rate drop from 7.37% on Nov. 9 to 6.67% on Nov. 10.
So how – and how often – should you be communicating rate changes to your borrowers?
Checking on rates
Jack Skovgard, a broker with Long Beach Home Loan Corp., said the first thing he looks at every morning is what’s happening with mortgage bonds and rate pricing compared to the day before. Depending on that margin, he said, he decides whether to call clients and update them on rate pricing.
It’s important to update borrowers that are going through a refinance or are at some stage of the purchase process pretty regularly on movement in the market, but mostly when something significant happens.
“I don’t want to be a broken record that’s like, ‘Oh, pricing’s better today, oh, pricing’s worse today,’ because none of that really matters unless you can lock a loan on that day for that pricing,” Skovgard said.
It’s not useful to tell borrowers about a rate they can’t get unless they’re ready to lock a loan at that moment. It typically adds more stress to the process, as there’s nothing a purchase client can do to get their offer accepted faster.
Making the call
Skovgard said the reason he communicated the Nov. 9-10 rate drop to his borrowers was because it affected approval for a lot of his clients who are currently shopping for homes.
Those calls entailed updating borrowers on the drop in pricing and what that means for their loan scenario. He provided numbers on how they could increase their purchasing power and what their new payment would look like based on the pricing drop.
“Just good information for people who are actively in the process to have and to work with,” he said.
He also noted that he wanted to reach out to borrowers about the rate drop early because that kind of rate change can become national news quickly, and it’s important that they hear about it from him as an expert that they’re using for the homebuying process.
“I think it helps build trust in the relationship for them to hear from me first, and then hear it from neighbors, friends and online sources after the fact,” he said.
Communicating with borrowers
So how should you communicate rate changes with your borrowers?
First, try not to get too deep into the weeds on inflation data and the details of why pricing may have improved. Clients are relying on their broker or LO’s expertise to help them navigate through the process, rather than trying to dig into the specifics of inflation and rate data themselves. The goal is to help them take advantage of the best loan scenario possible by predicting and explaining to them how pricing may change in the future.
“We find it best to always make the phone calls; whether they’re good phone calls or hard phone calls,” Skovgard said.
For clients that are on the brink of getting an offer accepted or those who have just gotten an offer accepted, make sure you have a direct conversation about locking their loans and their rates in before doing so. Some clients may choose to heed advice and some may choose to float their locks and not lock it in yet in anticipation or hope for better pricing.
“It can be a gamble if you do that, which is why I just try and indicate my best advice to the client,” he said.
Communicating with borrowers is key, especially in a business based on trust and referrals.
“It’s my job to inform borrowers of where the pricing is at, navigate them to the best decisions that I think should be made, and let them, as my client, ultimately make the decision of whether to lock in the rate for the loan or not,” Skovgard said. “I can give my best advice about what I think they should be doing based on my experience.”
Your goal should be to position yourself as a trusted expert to your borrowers. There are a variety of ways to do that, including through your communication methods and by continuing your education through podcasts and other media.
You can keep a close eye on mortgage rate changes by visiting HousingWire’s Mortgage Rates Center here.