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Jumbo Mortgage Rates Report--July 21, 2011- MARKET ALERT

LA JOLLA, CA--Jumbo mortgage rates are essentially unchanged since my last report (rate indications offered below) and that worries me.  Wall Street may be overconfident of a debt-ceiling hike deal and that overconfidence is priced into the market. 

In Washington, it can be tough to understand why New York is so sure of itself. While Wall Street is brimming with confidence that a deal will be struck, many Washington officials say the dynamics of this stalemate are different from any other they have encountered. And that means New York traders could be in for a big surprise in early August.

With less than two weeks to go before the Aug. 2 deadline, no deficit-reduction plan offered by the Senate or House has gained a significant amount of momentum. The House GOP’s “cut, cap and balance” proposal is dead on arrival in the Senate, which has yet to move its own budget. 

This means that a failure to extend the federal borrowing limit will catch markets by surprise; we could conceivably see jumbo mortgage rates rise 1-1.5% overnight, in early August.I've worked with mortgage-backed securities traders and I'm amazed at the huge gamble they're taking.  The culture of government bailouts is so pervasive in the financial community that the very flinty-eyed bankers are willing to ignore this risk.

Could jumbo mortgage rates go lower?   I suppose they could but not much.  There is clear and present risk right now.  If you CAN, lock your mortgage rate to avoid this risk.  

Jumbo Mortgage Rate Indications, as of July 11,, 2011:

• 5/1 ARM----------3.875%/4.110% APR
• 7/1 ARM----------4.375%/4.571%APR
• 10/1 ARM---------4.750%/4.917%APR
• 30 Yr Fix----------5.125%?5.557%APR
• 30 Y FNMJmbo-4.500%/4.724%APR
• 30 Y FNMA-- ----4.375%/4.615%APR

Jumbo mortgage rates quoted are for loan amounts from $700,000 to $2,000,000.  Credit, down payment, and income restrictions apply.  Not all will qualify.  Equal Opportunity Lender.  NMLS ID 339261

Jumbo Mortgage Rates Report--July 11, 2011

Jumbo mortgage rates gave returned to the end of June levels as the mortgage bond market reacted to a weak employment report and more fear about bloated PIIGS (European government default risk).  I talked about this in my Jumbo Mortgage Rates report for July 5, 2011.  

I digress but I'd be remiss if I didn't tell you that today is Free Slurpee Day.  Slurpees can cause Brain-Freeze.   I would love to freeze today's mortgage rates for a week or so but I'm not so sure the markets will accomodate.  Last week, I suggested you could hold out for lower rates; that happened.  Today, I think it makes complete sense to lock-in your mortgage rate at application.  While rates could trend lower, the risk of them rising another .25%...quickly, far outweighs the reward of them improving by .125%.  As always, my advice may not be perfect for you so it's best to speak with your loan originator.

Jumbo Mortgage Rate Indications, as of July 11,, 2011:

• 5/1 ARM----------4.000%/4.210% APR
• 7/1 ARM----------4.375%/4.571%APR
• 10/1 ARM---------4.625%/4.807%APR
• 30 Yr Fix----------5.125%?5.557%APR
• 30 Y FNMJmbo-4.500%/4.724%APR
• 30 Y FNMA-- ----4.375%/4.615%APR

Jumbo mortgage rates quoted are for loan amounts from $700,000 to $2,000,000.  Credit, down payment, and income restrictions apply.  Not all will qualify.  Equal Opportunity Lender.  NMLS ID 339261

Jumbo Mortgage Rates Report- July 5, 2011

Why do La Jolla, CA home buyers keep watching the riots in Greece?

Once again Greece threatened default on its soveriegn deb.  This sent shockwaves through the world financial markets.  This time around, the European Union was offering less solidarity and more austerity to its little peninsular cousin.  Capital fled European markets and into American treasury bonds during the middle of June.  This drove bond yields down which caused jumbo mortgage rates to decline to their lowest levels since 2004.

Last Monday, we locked a $500,000 loan, at 4.75% (30 year fixed), with no fees or discount points.  We locked a $1.1 million loan at 5.125% (30 year fixed), with no fees or discount points.  Today, those same loans would be more expensive by a discount point (1% of the loan amount).  This means that the first buyer would have to bring an extra $5,000 to closing today, and the second buyer would have to bring $11,000 to closing today , just to get the same rates.

Why are jumbo mortgage loans so much more expensive today than they were last Monday?  Greece struck a deal with the European Union to get emergency loans.  That action reassured golbal financial markets that a Greece default would be stayed.  Money flowed into equities and out of the safe haven of US Government securities.  Mortgage bond investors demanded higher yields from mortgage originators which was passed onto the retial borrower.

In which direction will jumbo mortgage rates head this summer?  I believe rates will be stable through Labor Day with some erratic movements upwards.  The federal Reserve bank has halted its quantitative easing plan.  While this should pressure jumbo mortgage rates higher, Greece is but the first of many sovereign default crises bubbling beneath the surface of a calm Mediterranean Sea.  I expect those threats of crises will hold the upwards pressure in check. 

If you can, lock a jumbo mortgage rate under 5%.  If higher than 5% is offered, you might pause to read what's happening in Europe.  Anothe ron of these crises could afford you that rate under 5%.

Jumbo Mortgage Rates Report- June 13, 2011

News which affects Jumbo mortgage rates:

International:  China says U.S. is already defaulting on its debt.  This has profound implications because it portends higher interest rates (in general) and higher mortgage rates (specifically).  Ironically, the Chinese seem to be echoing the tea party call for budget cuts rather than raising the federal debt limit.

National:  The US "War on Drugs" is failing and its costs contribute to federal spending.  Former Secretary of State George Schultz and Former Federal Reserve Chairman Paul Volcker point out that our domestic policy has inhibited governance and economic development.

California:  Is your neighbor pulling a fast one, by "short-selling" his home, only to by it back a year later at a much reduced price?  Lew Sichelman answers this Palm Springs home owner about the how the practice of flopping may catch up with the seller...down the road

Jumbo Mortgage Rate Indications, as of June 13, 2011:

• 5/1 ARM----------4.000%/4.210% APR
• 7/1 ARM----------4.375%/4.571%APR
• 10/1 ARM---------4.625%/4.807%APR
• 30 Yr Fix----------5.125%?5.557%APR

Jumbo mortgage rates quoted are for loan amounts from $700,000 to $2,000,000.  Credit, down payment, and income restrictions apply.  Not all will qualify.  Equal Opportunity Lender.  NMLS ID 339261

December 2010 Mortgage Rates Outlook

If you've been following the November mortgage rates rollercoaster, you have to wonder how conventional mortgage rates almost dropped below 4%, then almost topped 4.5%, and are hovering in the middle of that range today.  What will December bring in the mortgage rates market?

Let's look at what happened:

1- Warning signs about the second round of Federal Reserve Quantitative Easing (QE2), flashed at the beginning of November.  Still, the mortgage bond traders like what they saw in initial rollout of the program:

The best conforming 30 year fixed mortgage rates have moved back down to a range between 3.875% and 4.25%. 3.75% is phantom but I've received more than a dozen emails from borrowers who locked in a 30 year fixed loan at 3.75% today. Read "phantom"as believing in the existence of 3.75% but not having scientific proof. 4.25% is widely quoted with no closing costs while 3.875% still carries an expensive closing cost price tag.

2- While pleased with the initial reaction, I sensed a crack in the foundation of the bond market, and issued a lock-in alert, after the first weekend of November:

Mama Grizzly and Mama Brady know something about inflation; they do the weekly grocery shopping.  When Mama Brady told me that our grocery budget had to be adjusted upwards, while I was remarking that our budgeted monthly fuel expenses had to be adjusted  as well, I started thinking that inflation might just be around the corner- that’s not good for mortgage rates.

3- As expected, the bond market fell apart, and mortgage rates jumped .375%.  Why then, did I reverse course, just ten days later, if I felt this pressure building?

Traders are calming down, and trusting the power of central banks’ and governments’ bailouts again.  A trader’s loyalty is about as reliable as a lap-dancer’s love but, for the near-term, bond traders think  QE2 just might drive bond prices higher.  They ain’t selling too much and they ain’t buying too much.  Expect them to watch what happens through next week, then pile on the bond train, hoping to make a quick buck.  That’s good for mortgage rates, in the short-term.

What now, for December, 2010 mortgage rates?

I think we could see rates move back to the pre-November levels.  If you have a closing after December 15, 2010, you might consider waiting to lock-in your interest rate.  Two things support this strategy:

• QE2 buying, by the Fed, in absence of marklet moving economic statistics.
• Flight-to-quality, amidst the economic uncertainlty surrounding the Irish bailout (and a possibly escalating collapse in Portugal).  That strain on the European Union, has investors looking at United States-backed securities, as safe.

Why caution is needed, and you must have a mortgage loan originator who obsessively follows mortgage rates:

• The Fed's QE2 buying, might be seen as inflationary...again.  This would cause the bond bubble to prick and the escaping helium means higher mortgage rates.
• Economic figures might show a more robust economy rather than a slightly positive one.  A key figure for me will be the Black Friday retail sales.  That figure is always puffed up (and later amended) but it could be a key indicator as to how strong this alleged recovery really is.

In summary, I have enough evidence to warrant a delayed lock-in strategy.  The rewards are a potentially .25% lower in mortgage rate but the risks are treachorous.  If you are thinking of refinancing, don't delay on the paperwork.  Make an application, give the lender your paperwork, and wait patiently to lock-in and order the appraisal.

 

Mortgage Questions And Answers

Consumers want answers to mortgage questions in a low-pressure environment.  I created a forum for consumers with five topic headings:

• Jumbo Loans
• VA Home Loans
• FHA Mortgages
• Should I Lock or Float My Rate?
• Grab Bag

It's pretty slick because it allows you to sign in with your credentials from Facebook, Google, Yahoo, Twitter, Myspace, or Twitter.  I'll get an email that shows your question and come back and answer them daily.

Ask your questions here.

La Jolla Mortgage Rates and Homes For Sale Search

We are so pleased to offer a La Jolla mortgage rates search on the Coastal Real Estate Stars website.  Coastal Real Estate Stars is home to The Sullivan Group of Willis Allen Real Estate and associate real estate broker J.R. Sullivan.  A little bit about J.R. Sullivan:

J.R. Sullivan has sold real estate since 2003 when he earned his Broker’s License. However, he has been involved in real estate since age 9, when his parents got into the business.

J.R. grew up in La Jolla, attending Scripps Elementary and The Bishop’s School. He returned to his birth city, Los Angeles, to attend UCLA where he graduated in 1991 with a degree in Political Science. That same year, he took off to Poland where he spent 7 years working in marketing brand management and consulting. In 1997 he returned to the U.S. to attend Business School and received an M.B.A. from Emory University in Atlanta. After that, he continued in marketing management, first on the Lysol brand with Reckitt-Benckiser in New Jersey and later at San Diego’s Jack in the Box.

Like his parents, J.R. pursued two areas of Real Estate: home sales and property management. The Sullivan Group has many clients who buy property as a second home or as an investment. After a purchase, clients often ask the Sullivans to manage their investment.

To complement his experience, J.R. pursued further real estate education and earned a number of designations including a GRI (Graduate of the Realtor Institute), CRS (Certified Residential Specialist), and RMS (Risk Management Specialist).  J.R. even worked overtime to contribute to his community. In 2005 he was elected to the La Jolla Town Council and in 2007 he was elected as President of the La Jolla Real Estate Brokers’ Association (RE BA).

I am pleased to offer RatePeeker to his readers and offer mine the opportunity to search La Jolla homes for sale on the Coastal Real Estate Stars site.  We'll be asking JR a bunch of questions about real estate in La Jolla in the near future.

iPhone/ iPad Mortgage Rates Search Application

I'm pleased to announce that we have developed an application for the iPhone/iPad for mortgage rates search.  The app was approved yesterday and can be found in your "app store" by searching for "California Mortgage Rates".

You can also go to the California Mortgage Rates Search app on the web which prompts you to open iTunes and download it.

Our app is admittedly a tad bit clunky right now when comparing it to the 2-3 national search apps but there is a reason for that.  Our app is more personalized.  We prompt you to enter more specific information than the other do so that the quote you receive is commensurate with the guidelines and availability of loan programs.  Others give you "estimates" while our scours the top dozen lenders for real time quotes.

There is a better chance that you'll actually fund the terms you get, through our mortgage rates search application than you might on the national apps.  I often hear internet shoppers complain that the final loan terms offered were substantially different than what was displayed on the web.  Our personalization engine minimizes that variance.

When you open the app, you'll be prompted to "check mortgage rates".  When you click that link, it takes approximately 10-15 seconds to open the page.  The page opens in Safari and isn't properly formatted for mobile.  You'll be looking at a full page with a form to fill out.  Take 30-45 seconds to fill out the form and press "Get Results".  The results take another 30-45 seconds because the engine is actually searching a dozen lenders for terms and qualification guidelines.

We'll improve the interface soon but we think the extra 1-2 minutes is worth your time to get an accurate mortgage terms quote.   Take a look at it here.

Fixed Mortgage Rates Edge Lower- January 14, 2010 (From the L.A. Times)

Fixed mortgage rates edge lower - latimes.com

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Mortgage Rates from 2009…and a Look Ahead to 2010

I found this fascinating quote today:

The roller coaster is headed back up again, and this time it may be a steep climb.  The Mortgage Bankers’ Association forecasts that 30-year mortgage rates will increase through 2010 to end the year at 5.7%.  Freddie Mac predicts an even grimmer future, expecting rates to get to 6.0% in 2010.  Morgan Stanley thinks they’ll go even higher to 7.5% or 8% … levels we haven’t seen since the year 2000.zillow.com, Mortgage Rates in Review…and a Look Ahead, Dec 2009

You should read the whole article.