Mortgage Blog News – Week of Sept 29- Oct 3

The “NO” vote turned into a “YES” vote last week… I guess that is the biggest news… and boy did that [cough] stabilize things [cough]. Ughhhhmmmm. Sorry. Congress did approve the $700 billion “Bailout Bill” Friday. Ironically it was not exactly $700B… it was closer to $850B. Well, i mean come on… they had to do something to entice the ‘no’ voters to switch… why not more pork. Really… can you tell the difference between $700B and $850B? $150B doesn’t buy what it used to. [Especially now that they have devalued everyone’s money! Yippeeee.]

Oh, you thought they had that in a “lock Box” somewhere? He he he… naw, the just printed more therefore making the dollar in your hip pocket worth less! Oops.

The uncertainty prior to the vote created huge market swings that ultimately sent the Dow to its worst week since 9-11, while causing similar problems in the mortgage world.

Interest rates got worse for the 3rd straight week.

Taking the congressional vote out of the picture, last week’s technical data would have had rates falling… not going up. Uncertainty is the economic Anti-Christ. Is that too strong? LOL

For example, the nat’l economy lost another 159,000 jobs. This brings the 2008 total to 760,000 lost jobs. This reduces the likelihood of inflation and is normally good for mortgage rates. [When it comes to mortgage rates, inflation is like the 800# gorilla boogie man.] In addition, the dollar had its strongest week ever against the Euro… oh… you didn’t hear that on the news…. huh! Whoduthunkit. These economic events usually attract borrowers to the mortgage market, therefore lowering rates.

Lower rates = Home lovin’ goodness.

Additionally Fannie Mae eliminated one of its mandatory loan fee hikes. This improves mortgage backed-security pricing for buyers, again leading to lower rates.

But, mortgage rates rose didn’t fall last week and that shows how deep the economic uncertainty really ran. [Remember… uncertainty…. booooooo.] And this week, with the bill now passed into law, we would expect the market to turn its attention back to fundamentals. Butttttttt, it can’t.

Unfortunately, there’s isn’t much new economic data for release this week so it is likely the markets will take their cues from the following:

1. The 8 scheduled Fed speakers, including Bernanke on Tuesday
2. Wednesday’s Pending Home Sales report
3. Rumors of a “surprise” Fed Funds Rate cut [you heard it here first…]
   

Regardless of to what markets react, though, be prepared for them to react swiftly and for mortgage rates to dip and spike — often in the same day. Is this the “New World” of mortgage financing? For the foreseeable future…yup.

In other words, a mortgage rate quote from the morning is likely to be “expired” by the afternoon so if you see a rate and payment that you like, consider locking it. It likely won’t last long.

The Over/ Under on the BIG GAME

While I am a big college football fan, as I know many of you are… this is not about football… and as my veins bleed Orange and Blue [cough] Go Gators [cough], the players in this ‘game’ have colors of their own.

The question is… who are the players?

Is it the Green Tycoons of Wall St vs. The “White-robed” Senators

[I use the color selection quite loosely.]

Or is it the  more simply the

Reds of Washington vs. their across the aisle rivals, the Blues of Washington?

Now that the Bailout Bill has passed and will soon be less of a front-page-news item, there is likely going to be many MORE articles as to who/what is to blame for all of this mess we find ourselves in.  The ‘righteous’ in Washington D.C. are saying that the free markets are to blame and that it was pure greed that drove us to the brink.  Well, like so many times that the stakes are big, the loudest seem to be the ones that need to looked at just a little deeper.

Is that the case?  Did ‘runaway free markets’ cause this?  Well the over/ under is more aptly called the over regulation/ under regulation argument.  Someone whom I personally follow as a forward thinker in the industry, Brian Brady, wrote a post on BloodHound Blog, Deregulation is the New Regulation.  Brian, I believe, summed it up quite succinctly in three bullet points.

1. Borrowers that can’t meet Prime…
2. When gov’t regulates private industry…
3. When you move down the…

Read the article here

In light of the already-heated political climate, I will not make this a political post and the only names I will point out are: Barney Frank, and Chris Dodd, both Senators.  Do your own research to determine their influence.

At the end of the day, I continue to remain bullish on America.  Americans have been down, but we have never been out… current circumstances notwithstanding.

We will survive.