In volatile market, Angel Oak sets 30-day rate lock-in period


Lenders offer borrowers to lock in mortgage rates for a period between the offer and the closing date, which vary according to their policies.

However, during periods of instability, locking in the rate for a long time puts downward pressure on lenders’ margins, which hurts profits. This played out over the past few months due to massive rate increases. And more are expected to follow – the Federal Reserve has signaled six more rate hikes this year, with at least three more in 2023.

The last weekly Freddie Mac The PMMS survey, released on Thursday, showed the average mortgage purchase rate hit 4.67% at the start of last week, up 25 basis points from the previous week and the highest level since December 2018. Black KnightOptimal Blue OBMMI pricing engine, which takes into account refis and data from the Mortgage Bankers Association (MBA)reported that rates averaged 4.86% on Monday, up about 80 basis points in a month.

“The sharp rise in the 2-year swap rate along with the rapid increase in securitization market credit spreads has led to an unusually rapid rise in non-QM rates that the industry has never seen before,” said Angel Oak’s spokesperson.

Angel Oak Mortgage Solutions announced the change to its foreclosure policy on March 31, causing “confusion and stress” among brokers and borrowers, according to a company’s message on its LinkedIn page.

The company withdrew the changes the next day, saying it was “making appropriate updates to the system to reflect the borrower’s original loan information”. After that, the company’s spokesperson told HousingWire on Tuesday that it would honor all current locks, with the new policy only valid for future loans.

With mortgage rates now hovering around 5%, down from 3% or lower for most of last year, lenders are investing more in non-QM products. UWM recently rolled out bank statement loans targeting the self-employed as well as investor loans. Likewise, Homepoint unveils bank statement loans as well as non-QM cash loans for real estate investors. (Several other large non-banks also offer loan products to investors.)

Investors’ appetite for non-QM loans is also increasing in a higher interest rate landscape as they seek a better return on their investments. So far this year, non-QM volumes have been impressive: since the beginning of the year to March 25, a total of 29 non-QM securitization transactions have been completed or are in progress, with a value of 12 billion, compared to 17 deals worth $4.8 billion in the first three full months of 2021, the most recent Kroll bond rating agencyThe data shows.


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