FED Cut and Lower Orlando Interest Rates

Do they go to a special school to ‘speak FED’???  Good Lord, fellas… we gotta be able to understand this stuff to be able to respond appropriately… or is that not what you want? LMAO

Well, the Federal Open Market Committee voted to cut the Fed Funds Rate by .5% today. The benchmark rate now stands at 1.0%.  THIS DOES NOT LOWER MORTGAGE RATES

In its press release, the Fed got busy addressing the main issue at-hand, stating that economic activity has “slowed markedly”.  Ha… ‘markedly’… have you ever used that word in your life?  Well, my readers are notably smarter than I am, so you probably have!  Anyway, they pointed to three main causes:

1. Consumer spending…

Read the whole Blog post at THE Orlando Real Estate and Mortgage Chili Blog:

FED Cut and Lower Orlando Interest Rates

WAKE UP! Smart buyers are jumping in… with both feet!

“You buy when there’s blood in the streets”

–Baron Rothschild

With the simple statement, Buy-Low, Sell High… what should people be doing now? Um, isn’t it obvious? To the smart, forward thinkers it is…

Real estate buyers are jumping back into the Orlando housing market and taking advantage of Orlando mortgage rates.

Each month, The National Association of REALTORS^® [NAR] tracks homes that are under contract [to sell], but haven’t closed yet… hence a “pending sale.” It also publishes a monthly report to show the statistical data.

This report is important because it’s purpose is to predict future home sales activity. [I love simple logic.] History shows us that 80% of homes under contract will “close” within sixty days, and the vast majority of the remaining will close within 120 days.

If Pending Home Sales are up, it’s believed, actual home sales will be up, too.

Cause, meet Effect.

Effect, meet Cause.

In August, Pending Home Sales jumped 7% nationally. This returns us to levels not seen in over a year.

The report’s strength leads us to believe that buyers are returning to the housing market when added to the trend that started in March. This is reallyyyyy good news for sellers because more buyers on the hunt means more demand for homes which, in turn, leads to higher sales prices… or at least stabilized prices.

The Pending Homes report is not a faultless predictor, however.

For one, it’s not measuring an actual sale — just the expectation of one. It also does not include new construction… only existing properties.

Bottom line, the strong change in the trend in August tells us that home buyers are re-engaging at a ramped-up pace and finding that “now” is the time to buy real estate.

When buyer demand rises, the real estate market, as a whole, isn’t usually very far behind.

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.

(Image courtesy: The Wall Street Journal Online)

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.

“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…