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    Interest Rates Are Up, but it’s only half the story

    As we head into April I’d like to touch on trends in the economy, lending, and interest rates.

    Interest rates on most loan products are up.

    Mortgage rates on 30-yr fixed both for purchase and refinance teetered along the 3% line, hitting highs not seen since last summer. That said, new purchase loans were still up 26% last week in California so buyers seem to be weathering the small increases.

    Keep in mind that a loan in the low 3’s is still a ridiculously great rate!

    For those who have been in the business a while, think back to when 4 – 5% felt like an incredible deal. Remind buyers we are still at historic lows and thanks to Fed policy, will likely remain so for the rest of the year.

    The big change is funds and flexibility.

    Last year, lenders were fearful about the impact the pandemic would have on the economy. Investors stopped pumping cash in the lending market, and strict underwriting policies made it difficult to get a loan to the finish line – especially for non-conventional products.

    Today it is a very different story. Buoyed by an economy that is showing signs of recovery, investors are back in the loan market. There is a lot of money out there, and lenders are less restrictive on underwriting.

    Jumbo loan terms are strong.

    Lenders are beginning to compete for jumbo-loan business, which is good news for borrowers. I see more flexible guidelines and aggressive loan-to-values as high as 90% up to $2M and 85% up to $3M. These terms are favorable for LA homebuyers who reluctantly spend more because even though rates are up, housing inventory is at all-time lows. According to, housing inventory in the Los Angeles area dropped 19.7% YOY in March.

    We lead the country in NonQM loans.

    Last week, The Scotsman Guide ranked Cohen Financial Group number one in the nation for NONQM loan originations. I have always been an advocate for NonQM borrowers because self-employed professionals drive much of the LA economy. I developed investor relationships early on and now boast a deep network of traditional lenders and private money sources. Terms on NonQM products will continue to improve as the economy grows stronger.

    Positive economic data points to a recovery.

    Lastly, we saw two significant positives in the past week’s economy – a better than expected jobs report and a rise in the Consumer Confidence Index. According to The Conference Board, by the end of the year, around 4.5 million more jobs could be added to the economy, and the unemployment rate could drop well below 5 percent. As soon as 2022, a tight labor market could reappear.

    I look forward to robust April and welcome the opportunity to be your broker of choice.

    Mark Cohen

    Principal & CEO

    Cohen Financial Group

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