Dennis' Mortgage Blog

November 2nd, 2007 12:27 PM
Before I get into my weekly economic and rate update I want to make sure you know that we are still funding mortgages!  I have had several calls the last few weeks from agents and clients wondering if there are still loans available, if jumbo loans are being funded, etc.  Yes, yes and yes.  The underwriting guidelines have changed so we have to make darn sure of the information we are collecting for pre-approvals and applications, but that is what we do and have done extremely well for two decades.  I have heard some bad stories of borrowers not getting funded after loan docs are signed, or program changes, etc.  Being a broker we have many sources for most loans, we are funding the applications we take and say we are going to fund.  Having problems with a loan?  Call me!!
 
As I mentioned in my monthly email yesterday the effect of the Fed rate cuts on Wednesday are not necessarily having the effect that was desired.  The stock market is getting hammered again today, while this is benefiting bonds and mortgage rates today in the long run the reason for the pounding of equities this week will impact mortgage rates: inflation.  Economic news released today (jobs up 166,000 in September, double the number anticipated, earnings and salaries up, durable goods orders up) and this week show an economy that is still growing.  Between the Federal Reserve dumping several billion dollars into the economy (anyone out there remember when we used to follow M1 and the money supply?) plus the rate cut on Tuesday seems like adding some fuel to what may be smoldering inflation caused by ever rising energy costs and growing demand with low unemployment.  I am concerned that at the beginning of 2008 and we may see rates climbing significantly in response to inflation rapidly entering the economy.  Unfortunately the Fed has made its move for short term purposes, I hope the long term consequences do not impart even more harm on the housing industries.
 
Meanwhile back on the rate sheet, despite heavy moves throughout the week we end with no change in rates from Friday to Friday:
 
30 Yr. Fixed Conforming with 10% or more down: 5.875% at 1.00 point
30 Yr. Fixed Jumbo with 10% or more down: 6.625% at 1.00 point 
 
Note these are for 30 day locks, purchase transactions with 10% or more down and strong FICO's. 
 
 
I am seeing increased activity this week for pre-qualifications and purchase transactions--with excellent rates many buyers are finding the time is right to purchase their new homes.  As I said to one client who asked if she should wait to purchase: Buying a home is an emotional investment as well as financial.  When you find the right home, one that you want to write and offer on it speaks to you and you feel right about purchasing it and making it your home.  While it may be true that property values may, or may not, drop in the coming months, that home that you wish to make your home may be worth less than it is today--but it will not be for sale and some other family will be living in your home.  In Southern California supply and demand dictate that housing prices do not decline for prolonged periods and that in a longer term they increase in value.  Any buyer purchasing their home today will be grateful in four, five, six, twenty years hence when they decide it is time for it to be another family's home.
 
Have a great weekend,
 
Dennis
Friday, November 02, 2007
Posted by Dennis C. Smith on November 2nd, 2007 12:27 PMPost a Comment (0)
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