Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
As of the writing of this article, the Dow was down over 700 points, and the S&P dropped over 80 points, as stocks were pressured as new coronavirus cases spiked in many states by 30%. On Wednesday, it was announced that New York, New Jersey, and Connecticut may issue a travel advisory requiring people arriving from states with high coronavirus rates to quarantine for 14 days. Meanwhile, reports from the EU said member states were considering to block Americans from visiting their country due to the recent surge of cases in the U.S.
There are so many conflicting opinions about the necessity to “get back to normal,” while at the same time protecting oneself from a pandemic that clearly hasn’t been contained. The nation’s top infectious disease expert, Dr. Anthony Fauci, emphasized this week that Covid-19 has also led to extreme divisiveness in the United States. “People are seeking truth and information during these difficult times,” Fauci said. Needless to say, the unsettling data we are hearing is causing much uncertainty from wall street to main street.
With COVID-19 spikes plaguing countries nationwide, this week, the International Monetary Fund (IMF) forecasted weak global growth for the remainder of the year. The IMF is projecting Global growth to be at -4.9% in 2020 a decrease from their previous forecast. (Created in 1945, the IMF is governed by and accountable to the 189 countries that make up its near-global membership.) In its World Economic Outlook update, the IMF noted the coronavirus pandemic is causing a much steeper recession and a slower recovery than initially expected. They warned of a “higher-than-usual degree of uncertainty” around its forecast, which it said was based on a number of assumptions, including stable financial conditions.
More locally, the Mortgage Bankers Association (“MBA”) reported that mortgage applications for last week showed that overall loan volume was down almost 10% from the previous week. Purchase applications were down 3% – the first decline in 10 weeks – after coming off an 11-year high. Mortgages for refinances were down 12% but are still up significantly from this time last year. From what I am seeing and reading, the decline is likely due to capacity issues, not because of demand.
According to the MBA, interest rates remained unchanged at a national average of 3.30% which is 84 basis points lower than this time last year. A question that I often get is, why are people seeing higher national averages for mortgage rates than they are getting from actually calling their trusted local mortgage advisor. For example, we are convincingly below 3% for many of our mortgage clients who fall into the top tier. The wide-ranging spread from one mortgage company to the next is growing. The number one reason for people to refinance their current mortgage now is because it statistically makes sense, now.
The IMF said that $10.7 trillion in fiscal measures have been announced worldwide to fight the pandemic. This is sure to have long-lasting financial implications throughout the world. The second reason that people should highly consider refinancing now is that the world is smaller than ever before. Global economies and markets are intertwined and the sheer amount of stimulus and governmental intervention will have repercussions that will come without warning.
Finally, if current opportunities of low rates, or concerns of global reckoning don’t move you off your feet – the simple concept of “uncertainty” should make anyone look at the financial situation today and do a “mark to market” to make sure they are in the best financial circumstances possible. You cannot imagine how cheap money is at this very moment.
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