Mortgage Interest Rates Alert
Department of Financial Institutions
Contact: Scott Kinney, Communications Director
PH 360-902-0517, firstname.lastname@example.org
For Immediate Release: November 5, 2003
The Washington Department of Financial Institutions is issuing this alert to consumers that recent changes in interest rates may impact their ability to close on their mortgage loan. The Department is aware of two out of state lenders operating in Washington that have been unable to honor loan commitments in the past few days.
*A rate or loan “lock” is an agreement between the mortgage company and the borrower that establishes an available loan rate for a specific period of time. Such locks may or may not be guaranteed and the lock agreement may carry clauses that provide the mortgage company with a way out if they cannot perform. In such situations, borrowers who have “locked” their rate may find that the agreement does them little good when interest rates turn upwards.
*Interest rates can change on a daily or hourly basis making the mortgage market an extremely volatile environment. The situation is exacerbated when a large number of consumers seek financing at the same time. When loan volume is very high lenders may simply be unable to perform within the set period of the lock. Under most lock agreements the rate must then be renegotiated at the current market rate.
Consumers are advised to closely scrutinize any lock agreement and ask their mortgage company to explain the terms of the lock. Specifically, consumers should clearly understand the conditions under which the interest rate lock can be lost. For consumers that have already been informed by their mortgage company that their loan will not close at the expected rate, they may not have any choice other than to renegotiate a loan at current rates or seek out the services of another financial institution.