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San Diego Mortgage Rates Report- March 21, 2008

San Diego mortgage markets are taking pause today, in honor of Good Friday.  It was another dramatic week with Ben Bernanke playing John Wayne.  Last weekend, Bernanke brokered a deal that handed Bear Stearns over to Jamie Dimon and JP Morgan Chase. Last week, a share of Bear Stearns traded for the price of a tankful of gasoline, this week, it trades around the price of a Starbucks cup of coffee.  Fannie Mae and Freddie Mac agreed to buy a lot of mortgages, $200 billion worth to be precise.  This buoyed up the mortgage bonds market and had a positive effect on San Diego mortgage rates.

Let's lock those rates, now.  I don't see a whole lot more reward on the horizon and the risk of higher rates will increase next week.

ARM rates are out of whack, again, and the fixed-rate mortgages are the best priced.  Today, the wholesale rate for a 30-year fixed-rate loan is 5.625%.  If you called me, you would get that 30-year fixed rate loan for 1% of the loan amount plus $499 for an APR of 5.89%.  A 15-year fixed rate mortgage can be locked for 4.875% for an APR of 5.15%.  That's about .75% less than what rates were on March 10.  My advice to stay calm, in the face of panic, and float rates, panned out.

If you need specific advice, about a mortgage, contact me here.

San Diego mortgage markets are taking pause today, in honor of Good Friday.  It was another dramatic week with Ben Bernanke playing John Wayne.  Last weekend, Bernanke brokered a deal that handed Bear Stearns over to Jamie Dimon and JP Morgan Chase. Last week, a share of Bear Stearns traded for the price of a tankful of gasoline, this week, it trades around the price of a Starbucks cup of coffee.  Fannie Mae and Freddie Mac agreed to buy a lot of mortgages, $200 billion worth to be precise.  This buoyed up the mortgage bonds market and had a positive effect on San Diego mortgage rates.

Let's lock those rates, now.  I don't see a whole lot more reward on the horizon and the risk of higher rates will increase next week.

ARM rates are out of whack, again, and the fixed-rate mortgages are the best priced.  Today, the wholesale rate for a 30-year fixed-rate loan is 5.625%.  If you called me, you would get that 30-year fixed rate loan for 1% of the loan amount plus $499 for an APR of 5.89%.  A 15-year fixed rate mortgage can be locked for 4.875% for an APR of 5.15%.  That's about .75% less than what rates were on March 10.  My advice to stay calm, in the face of panic, and float rates, panned out.

If you need specific advice, about a mortgage, contact me here.

San Diego Mortgage Rates Report- March 18,2008

The Federal Reserve Bank Cut both the discount rate and federal funds rate .75% today in an effort to stimulate this slowing economy.  While commodities' prices accelerate, the housing market and subsequent liquidity crisis is dragging the economy into a recession. 

We call this phenomenon stagflation and it's REALLY  bad for the economy.  The Fed has been aggressively cutting interest rates and the declining housing market is closing down mortgage companies, investment banking firms, and real estate brokerages.  What more can the Fed do to help?

The Fed can (and will) buy mortgage-backed securities. 

Rather than to buy treasury notes in the open market, the Fed will be buying mortgage-backed securities.  They will want to get those assets off investment banking firms' balance sheets and provide stability to the MBS market.  Remember when I said that only the uneducated pay attention to the treasury note to determine the direction of mortgage rates?  Today is proof.

The spread between treasury notes and mortgage-backed securities has been widening these past six weeks. Why?  America was considered to be a sub-prime nation;  everybody was expected to default on their home loans.  Expect the Fed to prop up the MBS market in the next 4-6 weeks.  That will be bad for treasury notes and good for MBS.

Remember when I compared this to the junk bond crisis of the early 90's and advised you not to panic? Now is the time to take action.  There will be some great opportunities to lock into a low mortgage rates during the rest of this month.  If you're closing a loan in less than 14 days, lock your rate. Otherwise, float and see mortgage rates decline a bit.

I am always available for your question at (858)-777-9751.  March has been a very busy month for us so I may not be able to answer your questions immediately.

The Federal Reserve Bank Cut both the discount rate and federal funds rate .75% today in an effort to stimulate this slowing economy.  While commodities' prices accelerate, the housing market and subsequent liquidity crisis is dragging the economy into a recession. 

We call this phenomenon stagflation and it's REALLY  bad for the economy.  The Fed has been aggressively cutting interest rates and the declining housing market is closing down mortgage companies, investment banking firms, and real estate brokerages.  What more can the Fed do to help?

The Fed can (and will) buy mortgage-backed securities. 

Rather than to buy treasury notes in the open market, the Fed will be buying mortgage-backed securities.  They will want to get those assets off investment banking firms' balance sheets and provide stability to the MBS market.  Remember when I said that only the uneducated pay attention to the treasury note to determine the direction of mortgage rates?  Today is proof.

The spread between treasury notes and mortgage-backed securities has been widening these past six weeks. Why?  America was considered to be a sub-prime nation;  everybody was expected to default on their home loans.  Expect the Fed to prop up the MBS market in the next 4-6 weeks.  That will be bad for treasury notes and good for MBS.

Remember when I compared this to the junk bond crisis of the early 90's and advised you not to panic? Now is the time to take action.  There will be some great opportunities to lock into a low mortgage rates during the rest of this month.  If you're closing a loan in less than 14 days, lock your rate. Otherwise, float and see mortgage rates decline a bit.

I am always available for your question at (858)-777-9751.  March has been a very busy month for us so I may not be able to answer your questions immediately.

San Diego Mortgage Rates Report: March 10, 2008

Warren Buffett describes his investment philosophy as being fearful when everyone else is greedy and greedy when everyone is fearful.  Today, fear abounds in the mortgage bonds market and that is driving mortgage rates higher.

Rampant fear is why I'm suggesting that borrowers float their mortgage rate. I had been advising borrowers to lock loans, until all hell broke loose, on March 6,2007.  Investors are worried that the mortgage bonds they hold will be worthless.  This market is a lot like the junk bond market of the late 80s.  Those that panicked lost money; those that kept a cool head, profited.

Today a 30 year fixed rate loan is offered at 6.25%, up from 5.875%, and a 7 year ARM is at 6.125%, up from 4.875%. 

Can you see how much panic there has been in less than a week?

I think the market will calm down and traders will pay attention to the economic figures. The Consumer Price Index is due out Friday and that should be the big market mover.  Float your mortgage rates, for now.  Keep alert and keep checking back.

Contact me at (858)-777-9751 with questions or apply for a mortgage online for a quick response.

San Diego Mortgage Rates Report: March 6, 2008

San Diego mortgage rates skyrocketed this week and are .5% higher than Monday.  Two things have driven mortgage rates higher:

1- The threat of inflation is omnipresent in every economic report.
2- Two mortgage companies defaulted on their lines of credit.

Remember when I talked about how important it is to use a mortgage planner who subscribes to real-time MBS pricing? 

Why am I so adamant about the fact that the ten-year treasury note is not the determining factor of mortgage rates?  The statement is factually incorrect. While the two securities often move in concert, polarity can occur and sometimes does; this is one of those times.  The ten-year T-note is considered the benchmark, not bellwether fixed-income security.  This means that all other securities are compared to the 10-year T-note (we call that the “spread”).  It is GENERALLY a guiding indicator of ALL rates, however, in times or crisis or exuberance, it can’t be relied upon for other fixed-income securities’ direction.  Spreads to the T-note widen and narrow due to extraneous variables.

Today is what of those times.  Most loan originators will be telling you to lock today because the treasury bond market is up.  Today, I'm telling you to hold off your rate locks until the mortgage market goes through some price discovery.

I think that traders are overreacting to the defaults.  New mortgages, funded today, do not have the same risk to investors as the loans funded in 2003-2006.  The stricter underwriting guidelines will actually be the saving grace; mortgage rates will come back down when Wall Street realizes that the past doesn't equal the present.  Big economic news is due out on tomorrow; the employment report.

So, wait.  Don't lock your mortgage rate today.  You should check Mortgage Rates Report often to see any developments.  While I recommend that you float your mortgage rate (if you don't have it locked already), I could change that recommendation on a dime.

San Diego mortgage rates skyrocketed this week and are .5% higher than Monday.  Two things have driven mortgage rates higher:

1- The threat of inflation is omnipresent in every economic report.
2- Two mortgage companies defaulted on their lines of credit.

Remember when I talked about how important it is to use a mortgage planner who subscribes to real-time MBS pricing? 

Why am I so adamant about the fact that the ten-year treasury note is not the determining factor of mortgage rates?  The statement is factually incorrect. While the two securities often move in concert, polarity can occur and sometimes does; this is one of those times.  The ten-year T-note is considered the benchmark, not bellwether fixed-income security.  This means that all other securities are compared to the 10-year T-note (we call that the “spread”).  It is GENERALLY a guiding indicator of ALL rates, however, in times or crisis or exuberance, it can’t be relied upon for other fixed-income securities’ direction.  Spreads to the T-note widen and narrow due to extraneous variables.

Today is what of those times.  Most loan originators will be telling you to lock today because the treasury bond market is up.  Today, I'm telling you to hold off your rate locks until the mortgage market goes through some price discovery.

I think that traders are overreacting to the defaults.  New mortgages, funded today, do not have the same risk to investors as the loans funded in 2003-2006.  The stricter underwriting guidelines will actually be the saving grace; mortgage rates will come back down when Wall Street realizes that the past doesn't equal the present.  Big economic news is due out on tomorrow; the employment report.

So, wait.  Don't lock your mortgage rate today.  You should check Mortgage Rates Report often to see any developments.  While I recommend that you float your mortgage rate (if you don't have it locked already), I could change that recommendation on a dime.

San Diego Mortgage Rates Report: March 3, 2008

Lock all interest rates at application.  The unrest in Asian markets is bleeding to the US and traders are more concerned about the inflation risk than the possibility of a recession.  Economists believe that The Fed's easy money policy is really an investor bailout disguised as a recession aversion. They think it's compromising  the integrity of our economy.  As commodities prices (oil, food) accelerate, so may consumer, non-essential prices.

I still favor mid-term ARMs over 30 year-fixed rate loans.  We offer a 7-year fixed period ARM at 4.875% (5.18% apr) while a 30-year fixed rate loan is a full percentage point higher.. When you consider that the average hold time for a mortgage is five years, the 7-year fixed period ARM makes a whole bunch of sense.

It should be a volatile week ahead with lots of economic data being released.  Keep checking www.mortgageratesreport.com for updates.  Want your rate quote and good-faith-estimate reviewed FREE?  Fax it to (858)-605-4230 and call (858)-777-9751 to let me know it's there.

Lock all interest rates at application.  The unrest in Asian markets is bleeding to the US and traders are more concerned about the inflation risk than the possibility of a recession.  Economists believe that The Fed's easy money policy is really an investor bailout disguised as a recession aversion. They think it's compromising  the integrity of our economy.  As commodities prices (oil, food) accelerate, so may consumer, non-essential prices.

I still favor mid-term ARMs over 30 year-fixed rate loans.  We offer a 7-year fixed period ARM at 4.875% (5.18% apr) while a 30-year fixed rate loan is a full percentage point higher.. When you consider that the average hold time for a mortgage is five years, the 7-year fixed period ARM makes a whole bunch of sense.

It should be a volatile week ahead with lots of economic data being released.  Keep checking www.mortgageratesreport.com for updates.  Want your rate quote and good-faith-estimate reviewed FREE?  Fax it to (858)-605-4230 and call (858)-777-9751 to let me know it's there.