Hello all, I am a long-time lurker and finally signed an agreement of sale on a new construction. I have two months until close and need an opinion. I talked with multiple lenders and most of them advised to lock-in the rate right now since they anticipate them to go up later this month or during the start of the year. However, one of them was confident that the rates will be between 5.5% and 6% during the last week of January 2025. What are your thoughts and need some suggestions. I have a serious FOMO but also do not want to end up with a 6.75% rate while they drop around upper 5s when I close.
Anyone who is confident about rates one way or the other is not reliable. The people who truly know aren’t sharing their insights; they’re too busy enjoying their wealth elsewhere. Most lenders offer a float down option, so check what that entails with your lender if you decide to lock in early.
@Laurel
Absolutely agree. We thought our rates would drop after the elections, which is typically the pattern, but then they went higher. No one truly knows what will happen.
@Laurel
A nice hot cup of facts here.
@Laurel
Thanks for your response. One of the lenders mentioned a 60-day float, but he also mentioned that if the rates go up, I would be locked in at a higher rate. Do lenders provide an option for a float where I am locked in at the current rate and if it goes down, I get the lower rate, but if it goes up, I still get the rate I was initially assigned?
That person is misinformed. There is currently no reasonable expectation for rates to drop significantly. The markets expect inflation to increase with the incoming administration due to several policy proposals, and mortgage rates will likely reflect that expectation.
@Nori
Thank you for your response, I will look into locking-in ASAP.
I’m definitely not an expert but I honestly can’t see rates dropping by that much in one month. I would rate lock if it were me. You risk them going up further, especially in January when presidencies officially change and more uncertainty prevails.
@Sloane
Thanks for your response. I agree with your statement and it makes sense to lock in ASAP.
If you’re able to get mid 6s today, lock it in. After you close and if rates have gone down 6 months after, you can refinance. Anyone who says rates will be x% next year doesn’t even know what they will be tomorrow. Two weeks ago I was seeing high 5s/low 6s depending on factors and those are pricing 1/2-3/4% higher today.
@Ellis
Thank you for your response. I will consider this option and will look into refinancing if rates go down in 6+ months.
What happened to rates after Trump won? They went up and for a very good reason. Easy to figure out too as the mortgage rates have little to do with the interest rates that banks pay. The bond market is worried about rising deficits with Trump in a pretty big way so rates went up. That opinion has not changed in the last week so if someone is telling you that rates will be in the 5’s in late Jan they have been smoking the cheap stuff.
@Luca
Thanks for your response! Your statement makes sense and with the current scenario, it does direct towards an early lock.
Confidently peering into his crystal ball? I wish I had one of those, I’d be the wealthiest loan officer on the planet.
Shan said:
Confidently peering into his crystal ball? I wish I had one of those, I’d be the wealthiest loan officer on the planet.
Haha, I agree! I was a little shocked with that statement so thought to ask fellow people here. Thanks for your response!
Lock in the rate and if they go down substantially, just go with another lender.
Wil said:
Lock in the rate and if they go down substantially, just go with another lender.
Yeah, rates aren’t going to go down substantially in the time you’re locking in a rate and closing (most likely).
Wil said:
Lock in the rate and if they go down substantially, just go with another lender.
Thanks for your response! I will keep this in mind and lock-in ASAP.
I don’t know what rates will be next week or in two months, and truth be told, neither do the loan officers you’re talking to. Lock with one of the two suggesting to lock now. As someone else said, find out if they allow a float down if rates drop. I’ve seen credit unions offer this. If they don’t offer a float, see what the monthly payment is if you were to lock today and if you’re OK with it, lock it. If rates do indeed drop lower and beyond a float down, get a new estimate from the other two lenders and either ask the first for a match or go with one of the other two.
@Marlo
Thanks for your response. One of the lenders mentioned about a 60-day float however, he mentioned that if the rates go up, I will be locked in at a higher rate. Do lenders provide an option for float where I am locked in at the current rate and if it goes down, I get the lower rate, however, if it goes up, I still get the rate I was initially assigned?