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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.


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January 2020: The Roaring (or Boring?) 20's Are Here!

December 2019: Providing 'Alpha,' The Holy Grail of Investing

November 2019: The Search for Yield: Chapter 2

October 2019: Given the Current Rate Environment, How Has the Search for Yield Changed?

September 2019: What is the State of your State?

August 2019: Volatility is back, but is it the end of the world?

July 2019: Is This the Year 2000 All Over Again?

June 2019: Concerns of an Economic Slowdown?

May 2019: Benefits of Hedge Fund Investing

April 2019: Yet Another Burden On The US Economy

March 2019: Capitalism vs. Socialism: The Debate is Alive and Well

February 2019: What Are the Most Important Factors for Investing in a 401k Plan?

January 2019: A Look Back and a Look Ahead

December 2018: The Inverted Yield Curve - In Layman's Terms

November 2018: A False Sense of Security

October 2018: Reflections From Over Four Decades

September 2018: A Decade of Assisted Recovery

August 2018: The Entitlements Train Wreck - Possible Solutions?

July 2018: Is Wage Growth In This Country Improving Over Time?

June 2018: The Impact of Corporate Tax Reform

May 2018: Kentucky Derby Talks - Bulls vs. Bears

April 2018: How Much Longer Can Interest Rates Stay So Low?

March 2018: Policies For Economic Growth

February 2018: Volatility

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November 2017: Whack-A-Mole - D.C. Style

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July 2017: Quality of Life Influencers (Cont'd)

June 2017: Quality of Life Influencers

May 2017: Repatriation Myths and Realities

April 2017: Time to Invest in International Equities?  Let's Take a Look...

March 2017: Valuation - A History Lesson

February 2017: The Prince of Darkness

January 2017: Mountains of Debt - Does it Matter Anymore?

December 2016: Trumponomics: Reagonomics' Twin?

November 2016: Found Money

October 2016: Marrying Theory and Practice

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August 2016: Be Careful of High Dividend Stock Strategies

July 2016: "Die Younger" is Not a Strategy

June 2016: Blame Tina

May 2016: Would You Rather:  Tax Cut or Tax Increase?

April 2016: Father Time Demands Your Attention

March 2016: What Has the Last Year Taught Us?

February 2016: Winners and Losers of the Oil Battle

January 2016: Diversification Improves Returns and Lowers Risk

December 2015: Synergy and the Art of Building High Performance Portfolios

November 2015: Take Control...or the Government Will For You

October 2015: A Note from Our Dean of Business

September 2015: Double Espresso at Midnight

August 2015: An Allocation to Hedge Funds - Essential!

July 2015: Another Greek Tragedy?

June 2015: What Does Financial Planning Mean To You?

May 2015: The Active vs. Passive Battle

April 2015: Out on an Island – Preparing for the Fed Rate Hikes

March 2015: To Fee or Not to Fee?

February 2015: European Central Bank Tries QE – Will it Work?

January 2015: 2014 Recap