1/3 of Consumers Do Not Shop Mortgage Rates

By Taff Weinstein at

1/3 of Consumers Do Not Shop Mortgage Rates

Consumers can be picky when it comes to every day shopping, often times buying something online or from a different store just to save a few dollars.  But when it comes to comparing and shopping for mortgage rates, consumers appear to be less picky.

According to a new Fannie Mae survey, around a third of homeowners are not taking the time to look around for the best mortgage loans on the market.

In the first quarter of 2019, only 28% of buyers measured three mortgage quotes, Fannie Mae’s survey said. And the numbers drop dramatically for those who compared four loans (7%) and five loans (2%).

The report’s data reinforced Fannie Mae’s prior findings, which showed that many consumers “lack knowledge about mortgage basics.” A 2018 survey revealed that many consumers overestimated the minimum credit score and down payment needed to qualify for a mortgage.

According to Fannie Mae, two thirds of home-buyers sought multiple mortgage quotes in the first quarter. Breaking down those numbers showed how rate-shopping helped a significant portion of consumers to get more favorable outcomes.

Of that number, 47% of homeowners were able to negotiate their interest rates—and 36% were successful in that regard. Mortgage loan searchers also found success in negotiating discount points, with 20% engaging in negotiations while 13% successful.

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) gained just +47 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move lower from the prior week and hit their lowest levels of the year.

Overview:  The shock of the proposed tariffs on China (the remaining $300B that are not already taxed would now be taxed at 10% effective September 1) put upward pressure on MBS for some great pricing. The Fed also cut their key interest rate but that little to no impact on mortgage rates. 

The Talking Fed:  The much awaited Fed action finally happened.  You can read their official policy statement here.

Here is a summary:

  • They lowered their key Fed Funding rate a 1/4 point
  • The Vote was 8-2 with the 2 "No" votes against any cuts and wanted the Fed to stand pat (Esther George and Eric Rosengren).  Compare that to the last FOMC meeting which was 9-1 where they left rates alone and had one "NO" vote that wanted rates to be lowered
  • Overall, the tone of the statement actually was a little more positive about our economy than the last FOMC statement where they left rates alone.  The Fed hung its hat on "In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 2 to 2-1/4 percent"
Jobs, Jobs, Jobs: Big Jobs Friday!  You can read the official BLS report here.
Here is the tale of the tape:
July Non Farm Payrolls 164K vs est of 164K
June Non Farm Payrolls revised from 224K down to 193K
May Non Farm Payrolls revised from 72K down to 62K
This makes the more closely watched rolling three month average 140K
The Average Hourly Rate moved upward by 8 cents to $27.98.
The MOM change is 0.3% vs est of 0.2%
The YOY change is 3.2% vs est of 3.2%
The U3 Unemployment Rate remained at 3.7% which was expected
The Participation Rate moved from 62.9% to 63.0%
The number of long-term unemployed dropped by 248K
The U6 Unemployment Rate dropped to 7.0% which is very low.
Overall, this was a very solid report.


What to Watch Out For This Week:

The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.


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