Mortgage rates change every day – and these changes can have a big impact on borrowers. Over the past year, most of these changes appear to have taken an upward trend, but there are times when monitoring mortgage rates bodes well news, such as the fall in interest rates from 7.37% on November 9th to 6.67% on November 10th November.
So how – and how often – should you communicate interest rate changes to your borrowers?
Review of tariffs
Jack Skovgard, a broker at Long Beach Home Loan Corp., said the first thing he looks at each morning is what’s happening with mortgage bonds and interest rates compared to the previous day. Depending on that margin, he said, he decides whether to call customers and update them on pricing.
It’s important to update borrowers who are refinancing or at a certain stage in the buying process about market movements on a fairly regular basis, but mostly when something significant is happening.
“I don’t want to be a broken record saying ‘oh prices are better today, oh prices are worse today’ because none of that matters unless you can get a loan at that price that day lock,” Skovgard said.
There is no point in informing borrowers of an interest rate they cannot get unless they are willing to block a loan at that moment. This usually increases the stress of the process as there is nothing a buying customer can do to make their offer faster to accept.
Make the call
Skovgard said the reason he told his borrowers of the Nov. 9-10 rate cut was because it had hurt the approval of many of his clients who are currently home shopping.
These calls included updating borrowers on the price drop and what it means for their loan scenario. He provided figures on how they could increase their purchasing power and what their new payment would look like based on the price drop.
“Just good information for people who are actively involved in the process and who you can work with,” he said.
He also noted that he wanted to give borrowers early notice of the rate drop because these types of rate changes can quickly become national news and it’s important they know about him as the expert they use in the home buying process.
“I think it helps to build trust in the relationship if they hear from me first and then hear from neighbors, friends and online sources afterwards,” he said.
Communication with Borrowers
So how should you communicate interest rate changes to your borrowers?
First, try not to obsess over the inflation data and the details of 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 into the ins and outs of inflation and interest rate data themselves. The goal is to help them leverage the best possible credit scenario by predicting and explaining how pricing might change in the future.
“We find it best to always talk on the phone; whether it’s a good call or a difficult call,” said Skovgard.
For customers who are about to have an offer accepted or those who have just received an offer, make sure you have a direct conversation about having their credit and interest blocked before you do so. Some customers may choose to heed advice and others may choose to release their locks and not lock them in anticipation or hoping for better prices.
“It can be a gamble if you do that, so I’m just trying to give the customer my best advice,” he said.
build up trust
Communicating with borrowers is vital, especially in a business built on trust and referrals.
“My job is to let borrowers know where the rates are, guide them to the best decisions that I think should be made, and ultimately let them, as my clients, make the decision on whether to pay the interest rate for commit the loan 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 professional to your borrowers. There are a variety of ways to do this, 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.