Dennis' Mortgage Blog

As I write this I am in a conference room in Las Vegas (Planet Hollywood Hotel and Casino to be exact) learning how to operate a new contact software program I invested in back in January.  My intention with the software is to be able to better communicate with my clients and referral sources, have better tracking of my clients’ status through the home buying or refinance processes, and ultimately provide better service.  We shall see as this weekly update will be the first attempt in using the software! 

On a lighter note, it is strange for me to be in Las Vegas and working—while I am learning a lot I prefer the non-working Vegas getaways!  Back in town tomorrow.

Back just in time evidently as since our departure Wednesday morning the bond and mortgage markets have been in the absolute tank.  Following the panic late last Friday after I sent my update with Fannie Mae and Freddie Mac rates jumped mid-day.  Following the statements and maneuvers by the Treasury and Federal Reserve to back up Fannie and Freddie we saw rates improve on Monday and Tuesday.  Then the bottom fell out of the bond markets.  With economic news showing increasing inflation pressures Fed Chair Bernanke testified before Congress and it was evident the Fed is shifting from a position of stimulating the economy (lower rates) to combating inflation (higher rates).  With the news that the Fed would go after inflation investors have reacted by putting their money in the equity markets—not bond markets.  As a result rates have risen as stocks have climbed this week.

Today has been significant in that the mortgage backed securities have broken through the 200 day moving average.  What does this mean?  Remember that as bond prices go down the interest rates go up; if mortgage backed securities—the bonds that are used for mortgage investment—have their prices drop then the rates for borrowers (homeowners) go up.  In all investments, stocks, bonds, housing, there are levels of resistance that keep prices within a range for a period of time.  When a level of resistance is broken, up or down, then a new range of prices will come to the market.  This morning bond prices broke through the 200 day moving average floor that had been supporting mortgage rates; as a result we will probably see rates continue to climb until a new range is established.  Later today it may be that trading closes below the 200 day average—if so we may see the new range established where we currently sit on rates.

What does this mean for those in need of a mortgage?  First get solid and honest advice as to your situation and what your capabilities and options are in this market.  Second, once you have decided on a home, price, mortgage product LOCK IN!  Shopping for a “better rate” or “market improvement” can and will cost you when the market is volatile.  Ask those who did not lock in last Friday, or Monday, or Tuesday—today they are looking at rates that have climbed 0.25%. 

NOTE PRICING BELOW IS BASED ON 20% DOWN FOR JUMBO LOANS AND 10% DOWN FOR CONFORMING, 3% FOR FHA, FULL DOC, AND FICOS OF 720 AND ABOVE (change from last Friday):

30 year conventional at 1 point 6.375%         é 0.25%

30 year conforming-jumbo at 1 point 6.5%    é 0.25%

30 year FHA at 1 point 6. 5%                         é 0.25%

30 year jumbo at 1 point 8.125%                    é 0.25%

One of the reasons I have been able to succeed in the mortgage industry for over twenty years is because I have been forthright and honest with clients.  This means providing information on personal finances and qualifications that best suits their abilities and needs; it also means delivering accurate and honest information about the market.  If honest and trusted advice is important to you, and your family and friends, let me assist you with your mortgage needs.   

Please feel free to forward this email to your co-workers and clients--or send them to my Mortgage Blog where it is posted weekly.

Have a great weekend!

Have a great week,

Dennis