MReport May 2018

TheMReport — News and strategies for the evolving mortgage marketplace.

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TH E M R EP O RT | 43 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION The Reality of Rising Mortgage Costs A new study shows that rates are rising on both conventional and refinanced loans. L endingTree released its Mortgage Offers Re- port, which serves as a useful companion to other standard industry surveys on mortgage rates because, as LendingTree notes, "Most quoted industry rates are for a hypothet- ical borrower with prime credit who makes a 20 percent down payment." Many borrowers, however, do not fit this profile. For the month of February 2018, LendingTree reports that the best offers for money borrowers showed an average annual per - centage rate (APR) of 4.22 percent for conforming 30-year fixed purchase loans. This was up from 3.93 percent over the December 2017 rates. Refinanced loans were also up 38 bps to 4.13 percent. Mortgage rates vary greatly depending on parameters such as credit score, loan-to-value, borrowers' income, and property type, but for the average borrow - er, purchase APRs for conforming 30-year fixed loans offered on LendingTree's platform were up 25 bps to 4.80 percent in February. The loan note rate hit 4.70 percent for the month, up 25 bps over January and marking the highest rate since March 2016. Consumers with credit scores above 760 were offered APRs of 4.68 percent in February, whereas consumers with scores of 680-719 were at 4.95 percent. The APR spread of 27 bps between these score ranges was 2 bps narrower than in January, which still stands as the widest spread since April 2016. The spread represents over $14,000 in additional costs for bor- rowers with lower credit scores over 30-years for the average purchase loan amount of $240,955, owing to factors such as higher interest rates and larger fees. The refinance APRs for conforming 30-year fixed loans were up 31 bps to 4.77 percent in February. According to the report, the credit score bracket for February narrowed to 24 from 25 bps. This works out to nearly $13,000 in extra costs over the life of the loan for lower credit score borrowers, assuming an average refinance loan of $244,279. This report contains data from loan terms offered to borrowers on by lenders, including the average quoted APR by credit score, average down pay - ment, and other mortgage factors. "Most quoted industry rates are for a hypothetical borrower with prime credit who makes a 20 percent down payment. Many borrowers, however, do not fit this profile."

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