The ‘N’ word will it be the end of America as we know it…

Okay… I am going to say the “N” word… when the government Nationalized the mortgage biz in September, housing analysts predicted lower mortgage rates.

[Raising my hand in the back of the room…]

When has government EVER been able to do something better than the Private Sector???

Well…they were right… it did lower rates… for 2 weeks. For those 2 weeks Orlando fixed rate mortgages fell below 6.0% for the first time in sometime.

Since then…

Read the whole wicked cool article at:

The “N” Word will it be the end of America as we know it…

(Image courtesy: The Wall Street Journal)

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.

Mortgage Market, Stock Market, Unstable… Oh my!

<——— HAVE YOU SUBSCRIBED TO RECEIVE THE RSS FEED YET? Get notified when new Orlando Real Estate Posts are made.

After the House of Representatives defeated the ‘Emergency Economic Stabilization Bill of 2008’ affectionately known as the$700B Bailout… the stock market fell more in any single day in history.  [You probably have already recognized that the stock market does not favor uncertainty. =0)

The Dow Jones Industrial Average closed down 777.68 points, its largest one-day point loss ever.

Apparently, I am not the only one that remains bullish on America as a whole though, because only 24 hours later… we had the third largest GAIN ever.  I feel like the kid that gets a free pass to stay on the roller coaster over and over and over… only i am starting to feel like I may hurl if I don’t get off soon.  That Chili Blog…uh Dog… and the funnel cake isn’t resting well anymore! LOL

Does this mean, at the end of the day, the experts really don’t know that much  more than you and me?  Makes one think, does it not?

The stock market activity is highly relevant to mortgage rates right now because when investors flee the stock market, they’re often parking their money in bonds.

In general, that causes mortgage rates to fall.

But, as in many things, when folks regain their appetite for funnel cake [read: stocks], as they did Tuesday, they move back into the market, “un-parking” their bond money. This causes mortgage rates to rise… we have talked about this before referring to it as the “Flight to Quality”.

Both Monday’s and Tuesday’s drastic swings points to the speed at which market conditions can change, taking mortgage rates with them. At the end of the day, what does this mean for you… if you find a rate for a home purchase that you like, you may be best served by locking it in.  If  not you may find your hovering over the garbage can near the tilt-a-whirl. =0)

We can’t predict if rates will fall or rise going as we move into the future, but if the stock market is any sort of a clue lately, in whichever direction rates go, they’re going to go there like an amusement park roller-coaster.  [Personally, if I had to choose, I like the Hulk at Universal.]

“No” Vote on bailout… what happened to Orlando Mortgage Rates

On Sept 29th, the U.S. House of Representatives whooped up on the the $700 billion “Bailout Bill”, surprising Wall Street and the rest of the world for that matter.

The Dow responded by falling an astonishing 777.68 points — its largest one-day loss in all U.S. history.  The media, in prime fashion, did a great job in over reporting that… but guess what they missed? [Gee, have they over-reported anything else…say…over the last 3 years!! LOL… sorry pet-peeve of mind and how they scare consumers, but I digress.]

What they missed, however, is how the “No” vote created a terrific opportunity for Orlando mortgage rate shoppers.

Throughout the day Monday,money fled the tanking stock market and most of it ended up getting parked in the relative safety of government-backed bonds which includes, of course, the mortgage bonds. This phenom is called, “Flight to Quality”. This rising demand for mortgage bonds caused rates to fall.

To investors, both institutional and on street level, the stock market represented extreme risk and bond markets represented comparative safety… Translation: Rates get better.  Media seemed to miss that…. huh.  So, when market sentiment changes, as it did on Monday, Wall Street players often shift their dollars from one place to the other. This is why Monday’s stock sell-off was good news for Orlando mortgage rate shoppers — the added demand for “safe” securities drove down rates.

Mortgage rates were about about an eighth-percent less Monday.

Now, Tuesday, mortgage rates are opened flat, Then it got u.g.l.y.. Mortgage Backed Securities fell [fell is bad for rates, btw] back to where they were in the beginning of September… erasing the benefits gained.  In today’s volatile market, you need to be able to move quick… or that rate you saw…WILL be gone.

If the new-look bill is viewed as favorable to U.S. businesses without harming taxpayers, expect stock markets to improve and mortgage rates to rise. If the bill fails to accomplish that goal, however, expect mortgage rates to improve.

Quick sidebar… re-looks at this kinda stuff make me nervous.  When has a Bill that didn;t get enough votes, get smaller, in order to get more people on-board?  Never… they add more pork to it to convince other to vote.  Ughhhh.

Other Articles of Interest:

$7500 Tax Credit

Is DPA… DOA?

Lowering your rate EVERYTIME rates go down…

The Bailout – Interest Rates – what’s the connection…

Well, while you and I were kicking back over the weekend, Congress was hard at work. [Wow, when have I ever said that before…LOL.] They drafted their ‘bill’ Sunday evening and within the 110 pages of Congressional Brilliance [again, work with me here….], an important clause emerged that should be positive for interest rates for the time being…

In summary, page 40 has the points of interest:

The U.S. Treasury gets past of it [$250 billion] up-front

The next $100 billion must get executive branch approval

he next $350 billion must get legislative branch approval

In other words, the U.S. Treasury checkbook is not “wide-open” and they must get the go-ahead from these other checks and balances… this is a good thing. By limiting the Treasury’s spending to $250 billion up-front, with the $450 billion balance being subject to third-party approval, inflation concerns from last week should settle a bit. This feeling within the markets should, in general, have downward pressure on mortgage rates.

That is not to say that all other economic data is usurped though. This week, there are a few things things that could influence rates all on their own.

Today, Monday, September’s Personal Consumption Expenditures data comes out. Ewwww, doesn’t that sound fancy! Well, it basically is a cost-of-living measurement with a fancy name. It is one of the FEDs favorite measurements though, because it allows for human behavior modification in response to market prices.

For example, if orange groves got wiped out and OJ was $10 for a gallon, uuuhhh…. most people are switching to a new fruit juice and not going to pay that premium. PCE allows for those behavioral changes in its numbers.

Ah, PCE numbers just came out as I am putting finishing touches on the blog here… they came in just as expected .2% for August.

The Unemployment Rate touched 6.1 percent in August 2008. In addition, on Friday, the jobs report is released so we should see that number change slightly. Expectations are that it will increase [for the 9th straight month].

Rates – up or down? Yes, it will be up or down… sorry, poor humor i know, but i gotta tell you with all the volatility, it is really hard to predict. Therefore, if you see a mortgage rate with a comfortable accompanying payment, consider locking it in.

With as fast as markets have moved this year, you can be pretty sure the rate — whatever it is — won’t last for long.

Oh, one last thing, Citigroup just bought Wachovia’s banking assets. This is sure to be another fun week!

Chris – out

Read Previous Left-overs:

Mortgage Chili: Last week’s leftovers and what’s to come…

If I hear one more time that this bailout is a good idea…..

That is the title of an amazing article that my friend Tim Davis of Titan Home Loans wrote.  It was a great article that really goes past the surface ‘lip-service’ of what needs to be done and analyzes the actual results if those things were to come to pass…

Here are the poitns that Tim made:

“I think there should be tighter guidelines when getting a mortgage”

I find this an interesting statement, simply from the stand point the ones saying this are not currently trying to get a mortgage. It is easy to arm chair quarterback this thing, but something totally different when you are in the game. It isn’t fun fo ryour LO to call 50 times during the loan because the rules changed and they need more paperwork.

Here is another thing people say…

 

 

 

 

“I think you should have to put money down to buy a house”

Really? What if you are selling your home and NEED to move? Do you feel the same way then? Do you relly care what type of loan the buyer really gets at that point in time?

One the the gentleman at the interview  said this…

 

 

 

 

“I think the appraisers are to blame. The appraisal should be completely unbiased”

So I told him about the impending legislation to have appraiser totally removed from speaking with Realtors and loan officers. He thought this was a good thing, so I propose this scenario to him…

Lets say you have locked in a rate for 30 days. Your appraisal is ordered from a National vendor. The loan officer can not gaurantee when it will come in, so what happens if it takes 31 days to get the report in. At that time rates shoot up 1%. Your rate expired, so you have to take te new higher rate, but for pete’s sake your appraisal is a clean as the driven snow…at least until the market crashes again.

These are just some random thoughts that go through my head these days. A lot of people have opinions until they are the ones in the situation. We all like to say we have faith, but faith is not truly tested until we are deep in up to our eyeballs.

I guess the conclusion is we all make the argument depending on which side of the fence we are on at a particular time. That tends to be our human nature. That is why I like he following statement…

Sure the grass is greener on the other side, but don’t forget it still has to get mowed.

Keep your head moving forward and remember, this too shall pass…

 

There are even more I am sure… maybe we can get Coach Tim Davis to come and post what some others might be…

 

Chris

 

 

Mortgage Chili: Last week’s leftovers and what’s to come…

<——— HAVE YOU SUBSCRIBED TO RECEIVE THE RSS FEED YET?  Get notified when new Posts are made.

The U.S. Treasury is the biggest reason why most conforming mortgage rates increased by a half-percent.

Hank Paulson’s [Secretary of the Treasury] government group helped to restore investor confidence that had steadily eroded from concern to fear since July 2007, before succumbing to outright panic last week.

Wall Street nerves were so frayed that at one point Wednesday, yields on government bonds were actually in the negative; investors were paying the U.S. government to hold and protect their money in exchange for a guaranteed loss of investment.  No Joke!

After the Treasury’s interventions, however, a sense of normalcy returned to Wall Street…  money poured back into stocks… siphoned from the bond market and that pushed rates higher…. again.

This week, OMG, it’s anybody’s guess what will happen. 

From a data perspective, it’s light — there’s Existing Home Sales, New Home Sales, and not much else.  From a policy perspective, however, the week is heavy: 

• Congress is expected to authorize “hundreds of billions” for market support… $700 B is the discussion.
• Ben Bernanke and Hank Paulson will testify before the Senate Banking Committee
• 7 members of the Fed are making public appearances

With so much rhetoric, it’s difficult to predict how mortgage rates will perform this week.  The stock market may be the best predictor of rates.

If stocks are up, risk-taking is back in vogue and the bond market should suffer, pushing mortgage rates higher.  By contrast, if traders stay clear of stocks in search of safer investments, mortgage rates should fall.

(Image courtesy: Wall Street Journal)