Page 10 - March 2022 Issue.indd

DOLLARS AND SENSE by Tolbert Rowe

When demand exceeds supply, prices will go up.

is official, the Coronavirus’s themselves desperate for business and your transactional expenses or closing

impact on interest rates is will do or say about anything to fi ll their costs. This is especially true when there
over! Gone are sub 3% rates pipeline of business. This is leading is a possibility that real estate values will
t

h
It t had drawn so many many loan offi cers to find creative ways peak at some point in 2022 and interest
a
homeowners out of their pandemic for borrowers to justify refi nancing or rates may continue to rise due to an
slumber to refinance. And those who using them for a mortgage to purchase increase in infl ation.

purchased a home are guaranteed to a home.
Covid impact on the world’s workforce
have their mortgages long term because
When shopping for a mortgage has triggered delays in about everything
rates will never drop to these levels
borrowers are most concerned with in the supply chain. Automobile
again. Or at least I will never live to see getting the “best rate” with best manufacturers’ inability to secure
rates that low again.
rate being the lowest rate. The loan computer chips and other parts for new
The increase in mortgage rates has costs to get that rate are a secondary vehicles has turned acres of dealer lots
slowed refinancing to a trickle. As consideration, but they should be a into asphalt jungles. The new car buying

reported in the Wall Street Journal primary consideration. The more experience has morphed into one where
on February 10, “At the beginning of points you pay the lower the interest you used to be able to see and drive
this year (2022) there were 11 million rate and a lower interest rate must be the vehicle you were purchasing. Now
borrowers who were good candidates the “best” rate, right? dealers are drumming up excitement

to refinance their mortgages, according in the opportunity to build your own
to Black Knight, a mortgage technology Not if you must pay $8,000 in closing vehicle, if you are willing to wait the
costs or points to get it. My philosophy
and data provider. That has been has always been if you need to pay weeks or months to have it delivered.
slashed to less than 6 million as of mid-

points to justify refinancing then it is The price of used cars is so far out of
February, and down from more than 16
not a good decision. Keep the mortgage whack that a vehicle purchased new
million last February”. The increase in

that you have. And if you are buying a in 2019-2020 for $25,000 is worth the
mortgage rates in the last 30 days has house and considering paying points same today three years later. Th e same
cut the number of borrowers who could
for a purchase mortgage, do not. Use situation exists for those who leased a
benefit by refinancing in half.

the money you would spend on points, vehicle where the agreed upon price the

The increase in mortgage rates is forcing which is a transactional expense, and lessee could purchase the vehicle for
mortgage lenders and loan officers use it toward a bigger down payment, is lower than the vehicle’s value today.
to adjust their method of generating which is equity. Lessees can purchase the car they have
business. Those who relied on a Remember, when purchasing a home, been driving for the last 2-3 years and
steady stream of refi nance customers turn around and resell it for thousands
equity is good. Closing costs paid out of
inquiring on the internet now find of dollars more.
pocket are bad. Do all you can to reduce
Neither of these two situations has
ever happened before. Vehicles have
“Your Mortgage Consultant Since 1985” traditionally lost 20% to 30% of their
value as soon as they were driven off the
Purchase or Refinance dealer’s lot, and, depending on the make
and model of the vehicle, continued to
lose value over time. But according to
Cox Automotive the average listing
price for a used vehicle was $28,500 in
January which was a 31% increase from
115 E Dover St. Ste 3 - Easton, MD January 2021. Smart money should
tolbert@baycapitalmortgage.com C. Tolbert Rowe, have been buying used cars a year ago!
www.baycapitalmortgage.com NMLS Vice President/Lending Trillions of dollars in stimulus money
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are driving inflation to levels not
410-819-3005 / cell 410-310-3520 seen in over a generation, and vehicle
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