Well, yesterday for about 1 hour, rates were so good that you could hardly believe your eyes!!  You could get an FHA rate with no points for around 5.5%.  Then, before you could even get someone on the phone to lock a rate, the rates went up, up, up with an average total of 4 price changes for every bank during the day (and some banks just refusing to lock for the rest of the day)!  Every time you wanted to lock, you received notification that the rates had risen again and you had to wait for the new rates.  It was enough to make the loan specialists like me crawl under a rock!!!  The fun didn’t end there either, today the ride continued with further rate hikes and in the end, rates were worse than they were a few weeks ago. 

The reason for the recap is this.  Many of my clients would like to know how to tell, from the stock market updates, what rates are doing.  One VERY GENERAL rule of thumb is, if the stock market is having an especially good day, there is a good chance that the rates are having a bad day and vice versa.  Many factors contribute to this including the bond market and how money is moved back and forth.  However, the general rule is that the mortgage rates and stocks have an inverse relationship.  SO, is hope lost?

Of course not, 76% of all traders are still predicting another Fed rate cut and the rates are still incredibly good.  Those looking to purchase or refinance a home still have the chance to make their money go farther.  Also, part of the stimulus package agreed upon by our Washington leaders today includes raising the allowable loan limit for FHA loans and allowing Fannie Mae and Freddie Mac to purchase loans that, until now, have been considered too large or “Jumbo”. 

So, all in all there was a lot of mixed news this week.  As always, stay tuned for more and we will try to keep you informed!

Well, many economists are predicting that the Fed will cut consumer rates again at the end of this month.  Wishful thinking?  Maybe not.  Inflation seems to be holding fairly steady and unemployment seems to be on the rise.  The hope is that further rate cuts can also stimulate the badly faltering housing market.  This is great news for home owners hoping to refinance or buyers looking for a great deal in the housing market……IF they can qualify.  One factor having a drastic impact on the housing market is that many of the programs that used to exist to put people into homes are now gone.  For many of those programs, that is good news.  For others, valid programs that were good for consumers are gone.  New and more flexible programs will not see a return, however, until the lenders no longer have to continue declaring large losses every week due to failed loans.  I know the word “subprime” is considered a four letter word now but the truth is, it had it’s place.  For people who had many credit difficulties, a 2 year loan was the perfect stepping stone into what would hopefully turn into a more conventional “A-paper” product.   The problem is they became too easy to get and less than honest loan officers made it sound like the all purpose answer to any loan question.  Hopefully the difficulties now will eventually bring sanity and balance and allow for a stepping stone instead of a way of life.  In the mean time….a rate cut for the right borrowers can be a nice place to start!