Mortgage Siesta – Stock Fiesta… Columbus’s Wild Ride…

BUY BUY BUY!!!  Doooh… did you miss it?  Throughout the feverish activity on Wall Street last week, mortgage backed securities sold off with vengeance, driving mortgage rates to their highest levels since July.  It was the 4th consecutive week in which long-term rates got more badder. [Grammar police – I know that is not correct, breathe.]

But, with the mortgage markets taking a siesta celebrating Columbus Day on Monday, stocks had a little fiesta with the largest point gain LIKE….EVER! In fact the only reason it is #5 on the chart here is because the other days were back in the 30’s where a, no joke, 8 point gain was a 15% increase! Woooaahhhhh.

The Dow’s gains are expected to push mortgage rates down today, but as of right now, that is not the case.  Mortgage Backed Securities are up about +28bps but it is quite likely that they will reverse before days end.

Expect continued volatility until investor fears are somewhat squelched.  For now, keep those seltbelts fastened and all extremities in the vehicle at all times.

This week, look for key inflation info including the Producer Price Index [PPI] on Wed and the Consumer Price Index [CPI] on Thurs.

Both measure the “cost of living” and reflect on price pressures in the economy. If costs are rising, it’s considered inflationary and that tends to edge mortgage rates higher. [Again… the economic anti-Christ, remember?]

Lower Gas Prices in Orlando – Orlando’s real estate and mortgage Savior?

Okay, [my signature beginning for the return readers] given the stock market’s recent plummet, it is not at all surprising that oil’s free-fall has got very little attention. That doesn’t make it any less relevant though.

Since peaking at like $146 per barrel, oil prices are off by a HUGE amount. Friday, it was at $77.70. [Note the graph is GAS prices, not oil.] For those, like me, that went to public school… that is almost HALF.

Falling gas prices are an important positive for the U.S. economy [have you heard that recently from the media?] because less money spent on Exxon’s elixir means that more money is saved per household for everyday items including food and other staples. Don’t forget the cost of energy affects almost every level of the things we need and buy.

Did you know that consumer spending makes up two-thirds of the economy.

Therefore, falling gas prices may reduce the odds of a forecasted recession. Because Americans are notoriously poor savers, hellooooooo…negative savings rate????…. the extra cash-on-hand is likely to get spent which, in turn, will push the economy forward through the upcoming holiday shopping season. Yeah, it is close… time flies huh?

So, just as inflation [if you remember from a previous post] can bad for Orlando mortgage rates, so can an impending recession… duuhhhhhh. And while recession won’t always cause mortgage rates to rise, right now, it’s one of the factors driving rates higher in this “new world”. Falling gas prices may help keep that scenario ain check.

Chris the Implementer

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Written by Chris Brown, an Orlando Loan Officer. For more information about purchase loans or refinances on primary residences or investment properties, please contact me directly @ 407-377-0500 x 210.

Orlando Mortgage Rates and BLOOD shooting from your eyes…

On Monday, the Dow Jones closed below the mental barrier of 10,000 points for the first time since 2004.

Bad news… well it depends… doesn’t everything these days!? Despite the milestone of ‘doom and gloom’ there is a large group of the American public with reason to “stand up and cheer” [You gotta say that like that Las Vegas boxing announcer guy. Trust me, say it out loud and it will make you laugh.] Anyway, as stocks sold off, mortgage bonds rallied to the benefit of Orlando home buyers and mortgage rates shoppers everywhere. Remember, we talked about this being called the ‘flight to quality’? Anyone? Buehler?

Conforming mortgages rates improved on Monday. No wait, no they didn’t, wait… yeah… that’s right they did. [Isn’t this fun?] here is why you don’t need to read the rest of this… if this kind of thing makes blood shoot from your eyes… just make sure you have someone [call them…say…uh… a freak] in your corner that actually eats this stuff for breakfast. Did I mention I love writing blogs about blood shooting from people’s eyes?

Most interesting here is that rates improved for the same reason that the stocks fell. That was the LARGE SUCKING SOUND you heard. See, the worlds’ economies, yeah… they got people worried. It seems that investors have lost their collective appetite for risk for the time being. In response, they sold their stock positions and parked the proceeds in the “safe haven” of U.S. government-backed debt. [Read again – flight to quality]

Now, we can’t predict when the market’s risk appetite will return any better than predicting any insatiable carnivorous activity, but when it does, expect money to flow into stocks just as quickly as it left… ANOTHER LARGE SUCKING SOUND.

All year long, with respect to stock markets, it’s been either “everybody in” or “everybody out” and, for now, it’s everybody out. This is why mortgage rates fell Monday.

As evidenced by Tuesday’s reversal to worsening for Orlando mortgage rate shoppers, it is imperative the Orlando home searchers have their finger on the trigger so they can get the best mortgage rate and get the rate lock in place. [Was that good English?] In other words, be ready to lock that mortgage rate because as soon as the stock market reverses course, mortgage rates will head higher.

And if stocks recover as quickly as they tanked, expect mortgage rates to spike badly.

(Image courtesy: USA Today)