Mortgage rates change every day – and these changes can have significant effects on borrowers. Over the past year, it seems like most of these changes have taken an upward trajectory, but there are times when monitoring mortgage rates spells good news, like the 7.37% rate cut on November 9 to 6.67% on November 10.
So how – and how often – should you communicate rate changes to your borrowers?
Rate check
Jack Skovgard, a broker with Long Beach Home Loan Corp., said the first thing he looks at each morning is what’s happening with mortgage obligations and pricing compared to the day before. Based on that margin, he said, he decides whether or not to call customers and update them on pricing.
It’s important to update borrowers who are going through a refinance or who are at some stage in the buying process fairly regularly about market movements, but especially when something big is happening.
“I don’t want to be a broken record thinking, ‘Oh, prices are better today, oh, prices are worse today,’ because none of that really matters unless you couldn’t lock in a loan that day for that price,” Skovgard said. .
There’s no point telling borrowers about a rate they can only get if they’re willing to lock in a loan at that time. This usually adds more stress to the process, as there is nothing a buying customer can do to get their offer accepted faster.
Make the call
Skovgard said the reason it communicated the Nov. 9-10 rate cut to its borrowers was because it affected the approval of many of its customers who are currently buying homes.
These calls involved informing borrowers about the price drop and what it means for their lending scenario. He provided numbers on how they could increase their buying power and what their new payout would look like based on lower prices.
“Just good information for people who are actively in the process to have and work with,” he said.
He also noted that he wanted to reach out to borrowers about the rate cut early because this type of rate change can quickly become national news, and it’s important they hear about it from him as a expert they use for the home buying 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 afterwards,” he said.
Communicate with borrowers
So how should you communicate rate changes to your borrowers?
First, try not to go into too much detail about inflation data and details about why prices may have improved. Clients rely on the expertise of their broker or LO to help them navigate the process, rather than trying to dig up the details of inflation and rate data themselves. The goal is to help them take advantage of the best possible loan scenario by predicting and explaining to them how prices might change in the future.
“We think it’s best to always make the phone calls; whether it’s good phone calls or hard phone calls,” Skovgard said.
For clients who are about to have an offer accepted or those who have just had an offer accepted, be sure to have a direct conversation about locking up their loans and rates before doing so. Some customers may choose to heed the advice and some may choose to float their locks and not lock them yet in anticipation or hope of a better price.
“It can be a gamble if you do that, so I’m just trying to point out my best advice to the client,” he said.
Build trust
Communication with borrowers is key, especially in a business built on trust and referrals.
“It’s my job to educate borrowers about pricing, guide them to the best decisions I think should be made, and let them, as a client, ultimately decide whether to lock in the rate of the ready or not,” Skovgard said. “I can give my best advice on what I think they should do based on my experience.”
Your goal should be to position yourself as a trusted expert to your borrowers. There are different ways to do this, including through your communication methods and continuing your education through podcasts and other media.
You can closely monitor mortgage rate changes by visiting HousingWire’s Mortgage Rate Center here.