This Month’s Newsletter

Is There Any Good News Out There? Join our Monthly Newsletter March 2020

Mark R. Hoffman

CEO, Principal

Coronavirus. Equity market sell-off. Oil prices collapsing. UNC basketball team in shambles (I’m a Tarheel – this is a tragedy). Is there any good news? Well, if you have a mortgage, there is some good news. It almost doesn’t matter how long ago you secured the mortgage or refinanced it. Refinancing it again now would almost assuredly save you a boat load.

I’m writing this article on the morning of March 9. Why would I tell you that? Because our all-time low interest rates are falling again huge. Live data on this is hard to get. My partner Trip was working with BNY Mellon on Friday to refinance one of our client’s mortgages and for the first time in history, the bank didn’t even issue rates – they couldn’t price them. Let me reiterate for emphasis – this never happens.

So here is the best stab I have at this, using best available data (as of close of business 3/6). Mortgage News Daily puts out weekly surveys of average mortgage rates. Here is the picture over the past 52 weeks. Thirty and fifteen year fixed mortgage rates have fallen ~1.3%. That’s 1.3 percentage POINTS. The 5/1 Adjustable Rate Mortgage has fallen 1.6 percentage points. This is what I mean by “it doesn’t matter when you last refinanced…” Mortgage brokers will tell you that if you can save 0.5-0.75%, you should refinance. We are way past that.

What does this mean from a “cash in your bank account” perspective? I played with some mortgage refinance calculators this morning. For every $100,000 of mortgage, you could save $72-86/month. That’s $864-$1,032/year for every $100,000 of mortgage that you have (assumes 30-year fixed rate mortgage moving the rate from 4.45% to 3.13%). How much you save will vary some based on credit score, size of mortgage and of course, your starting mortgage rate. But these are very large numbers.

And there is another thing. Rates vary dramatically from lender to lender. On March 4, Mortgage News Daily found 30-year rates as high as 3.5% and as low as 2.875%.

The takeaway is this – if you haven’t called your mortgage broker in the last week, call them. And I use the term mortgage broker intentionally. Those guys will shop the rates for you. Don’t just call the bank you’ve been doing personal banking with for years. I’ll bet you lunch you can do better. If you can get your broker on the phone (refinance activity is over 200% higher than it was last year), you will win. And goodness knows, we could all use a win right about now.

Mark is a co-founder of Lanier Asset Management and serves as its Chief Executive Officer. Prior to founding Lanier, he was a partner at The Boston Consulting Group. Mark is an honors graduate of The University of North Carolina at Chapel Hill with a BA in Economics, and holds an MBA from The Harvard Business School.