“We’re working with prospective homebuyers that are either starting the process or are about to start the process. And you’ve quoted them one rate and then, suddenly, within a couple hours, the rates are a little bit higher. You never want to give a shocking update to customers,” he said.
Like all mortgage professionals, Kwon said he was fully aware the industry had benefitted from COVID with “rock bottom” interest rates but he pointed out that the increase, albeit moderate, had still come as a shock to clients.
The broker, who is also the owner of EA Lending, said: “We never like sudden increases – we like to see gradual ones. So, we had a bit of a bloodbath day yesterday with the bond market getting hit hard.”
“In my 20 years, I’ve seen it three times and usually it’s due to very dramatic economic news, but yesterday there was a little bit of a panic, with the Fed saying that they wanted to do some tapering.”
Since the start of the pandemic, the Fed has been buying $120 billion a month of Treasuries and mortgage-backed securities to support the economy, much of which has been used to bolster the mortgage industry and allow lenders to maintain low interest rates.