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Just closed financing on a home. Rocket had a comparable rate but the real no-go for us was their very-limited rate-lock option. With interest rate trends what

Just closed financing on a home. Rocket had a comparable rate but the real no-go for us was their very-limited rate-lock option. With interest rate trends what they are right now, we really needed a 200 day + rate lock with a float-down in case things changed. Other lenders (builder, ownup options, local banks) offered those and the option to buy points and apply them if we were able to float down. Rocket seemed very slow to adjust to the market forces with competitive options.

ab_testing 4y ago
Could you tell me which other lenders are offering 200 day + lock. With interest rates changing so fast, I get a hard time with lenders letting to lock rates even for 60 days.
- adoxyz 4y ago
  Same. I think the days of 2+ month locks are over. I've talked to half a dozen lenders since the new year and the longest lock they'd give without massive upfront fees was 60 days.
  - iskander 4y ago
    I got a 3 month lock from Chase this past October but it might be that things have changed since then.
  - pempem 4y ago
    Got 90 days from NASB - worth checking out.
  - pc86 4y ago
    We got a 90 day from Chase in February for nothing, all we had to do was ask for 90 instead of the 60 they wanted to give us, and after about 10 seconds of typing he said that was fine. I think we're a far cry away from "the days of 60+ day rate locks are over"
    - adoxyz 4y ago
      Interesting. I didn't talk to Chase specifically, because even as one of their better customers, the rate they offered was at least 0.5% higher than every other place, so I didn't even bother.
- davio 4y ago
  Kind of funny that 60 days is too long for a product that lasts 30 years. My guess is local banks and credit unions are the most likely source. They keep the loans on their portfolio instead of selling them like the mortgage companies.
  - ak217 4y ago
    A 200 day lock is a call option on a loan, the price of the option changes all the time. What you're saying is that local banks/CUs would offer such an option for free. Someone has to pay for the option - in the scenario you describe, the bank/CU would pay for it by losing liquidity of its assets, then having to mark them down. Rate locks are backed by rate swaps. The cost of purchasing a rate swap ultimately comes out of your pocket in the form of additional rate on the loan (the lender can add overhead of course). The cost of rate swaps has doubled in the past 3 months and quadrupled in the past 18 months. I believe it's currently around 3% on 10 year loans, so a 60 day lock on a $500K 10Y mortgage would cost about $2500 while a 200 day lock would cost over $8000.
    - pc86 4y ago
      Who the hell is buying 10Y mortgages?
      - ak217 4y ago
        Feel free to add an extra percentage point for a 10Y/30Y swap. One interesting hypothesis is that the focus on fixed-rate 30Y mortgages is fundamentally destabilizing for the US and world economy, because the stability and optionality of 30Y mortgages is paid for by added volatility of the 10Y debt market through those same swaps. Per this theory, US 30Y fixed-rate mortgages are effectively subsidized by the rest of the world. https://byrnehobart.medium.com/the-30-year-mortgage-is-an-intrinsically-toxic-product-200c901746a https://byrnehobart.medium.com/the-30-year-mortgage-is-an-in...
        kelnos 4y ago
        Seems like most folks can barely avoid the monthly payment on a 30Y fixed; wouldn't 10Y being the norm just cause a lot of people to be unable to buy at all?
- bdcravens 4y ago
  Not 200 days, but was able to get a 180 day lock in February. Of course, that was before the rates shot up, so my current rate is probably better than those with far better credit can get, just a couple of months later.
bombcar 4y ago
I played with Rocket and some other one - maybe "Better"? - but the rates they had were the same as a "full service" lender I've used before once everything was taken into account. In the end all of these companies resell their mortgages to the big banks and so the amounts are very similar. It's all in how they get their fees: up front or behind or in points.
yardie 4y ago
I guess things must have really changed in the last 2 years. Our rate lock was the standard 30 days and once we got close to the deadline I had a new contract drawn up just in case. 60 and 200 days seems so foreign to me. I guess the good times got even better after we closed.
PragmaticPulp 4y ago
Extended rate lock periods don't come for free, though. Lenders aren't really interested in giving away long mortgage locks when everything points to increased rates over the year. You generally pay for it one way or another. If you're discussing builder financing: New in-progress construction loans are different than traditional mortgages. Not everybody plays in that space.
acjohnson55 4y ago
Yeah, non-bank lenders are generally not going to offer locks nearly that long. It's very costly for the lender or the mortgage investor to hedge against interest rate volatility for that long. Banks often consider mortgages to be a loss leader to acquire customers for other services. They often don't have the best rates when rates are low, but they might have other perks like custom loan programs and longer locks.

ab_testing 4y ago

Could you tell me which other lenders are offering 200 day + lock. With interest rates changing so fast, I get a hard time with lenders letting to lock rates even for 60 days.

adoxyz 4y ago
Same. I think the days of 2+ month locks are over. I've talked to half a dozen lenders since the new year and the longest lock they'd give without massive upfront fees was 60 days.
- iskander 4y ago
  I got a 3 month lock from Chase this past October but it might be that things have changed since then.
- pempem 4y ago
  Got 90 days from NASB - worth checking out.
- pc86 4y ago
  We got a 90 day from Chase in February for nothing, all we had to do was ask for 90 instead of the 60 they wanted to give us, and after about 10 seconds of typing he said that was fine. I think we're a far cry away from "the days of 60+ day rate locks are over"
  - adoxyz 4y ago
    Interesting. I didn't talk to Chase specifically, because even as one of their better customers, the rate they offered was at least 0.5% higher than every other place, so I didn't even bother.
davio 4y ago
Kind of funny that 60 days is too long for a product that lasts 30 years. My guess is local banks and credit unions are the most likely source. They keep the loans on their portfolio instead of selling them like the mortgage companies.
- ak217 4y ago
  A 200 day lock is a call option on a loan, the price of the option changes all the time. What you're saying is that local banks/CUs would offer such an option for free. Someone has to pay for the option - in the scenario you describe, the bank/CU would pay for it by losing liquidity of its assets, then having to mark them down. Rate locks are backed by rate swaps. The cost of purchasing a rate swap ultimately comes out of your pocket in the form of additional rate on the loan (the lender can add overhead of course). The cost of rate swaps has doubled in the past 3 months and quadrupled in the past 18 months. I believe it's currently around 3% on 10 year loans, so a 60 day lock on a $500K 10Y mortgage would cost about $2500 while a 200 day lock would cost over $8000.
  - pc86 4y ago
    Who the hell is buying 10Y mortgages?
    - ak217 4y ago
      Feel free to add an extra percentage point for a 10Y/30Y swap. One interesting hypothesis is that the focus on fixed-rate 30Y mortgages is fundamentally destabilizing for the US and world economy, because the stability and optionality of 30Y mortgages is paid for by added volatility of the 10Y debt market through those same swaps. Per this theory, US 30Y fixed-rate mortgages are effectively subsidized by the rest of the world. https://byrnehobart.medium.com/the-30-year-mortgage-is-an-intrinsically-toxic-product-200c901746a https://byrnehobart.medium.com/the-30-year-mortgage-is-an-in...
      - kelnos 4y ago
        Seems like most folks can barely avoid the monthly payment on a 30Y fixed; wouldn't 10Y being the norm just cause a lot of people to be unable to buy at all?
bdcravens 4y ago
Not 200 days, but was able to get a 180 day lock in February. Of course, that was before the rates shot up, so my current rate is probably better than those with far better credit can get, just a couple of months later.

bombcar 4y ago

I played with Rocket and some other one - maybe "Better"? - but the rates they had were the same as a "full service" lender I've used before once everything was taken into account. In the end all of these companies resell their mortgages to the big banks and so the amounts are very similar. It's all in how they get their fees: up front or behind or in points.

yardie 4y ago

I guess things must have really changed in the last 2 years. Our rate lock was the standard 30 days and once we got close to the deadline I had a new contract drawn up just in case. 60 and 200 days seems so foreign to me. I guess the good times got even better after we closed.

PragmaticPulp 4y ago

Extended rate lock periods don't come for free, though. Lenders aren't really interested in giving away long mortgage locks when everything points to increased rates over the year. You generally pay for it one way or another. If you're discussing builder financing: New in-progress construction loans are different than traditional mortgages. Not everybody plays in that space.

acjohnson55 4y ago

Yeah, non-bank lenders are generally not going to offer locks nearly that long. It's very costly for the lender or the mortgage investor to hedge against interest rate volatility for that long. Banks often consider mortgages to be a loss leader to acquire customers for other services. They often don't have the best rates when rates are low, but they might have other perks like custom loan programs and longer locks.