The week has been exciting, to say the least. Mortgage rates have been up and down at least 15 times, the prime rate is down to 0.0-0.25% (the lowest EVER), the auto giants are getting bailed out, and the government legislated that credit card companies can no longer raise rates on existing balances when there are on time payments, and a 21 day grace period on late charges. Oh, but the companies have until July 2010 to comply. What a relief!???????
The mortgage rates are the lowest in 50 years. According to where the 10 year treasury is, they should be lower than 4.25%, but no investors on the secondary market are buying these coupons. No buy, no sell. The lenders are gridlocked. Running scared to offer a coupon (rate) they cannot finance as a mortgage backed security. The government has talked of stepping in and buying such coupons, so that lenders will lend. Not official yet, but when they do, who knows? The result would be motivated buyers, and ability to qualify for the dream home they have always wished for. Maybe just in time for all of us to return from the holidays refreshed, and ready to sell some houses! I really do predict that 09 (at least Q1) will be vibrant, and the market will begin to move. Who would not want to buy a home at historic lows?
Have a joyous holiday. This will be my last update of the year. Thank you for your support of Patriot Bank Mortgage. Your referrals are so appreciated, and we look forward to being your trusted mortgage source in 2009!
Saturday, December 20, 2008
Friday, December 12, 2008
Rates to 4.625%, Will builders be the next demise?
Well, on Friday I did receive confirmation from Santa that I have been good….rates were 4.625% on a 30 year fixed. (They were 4.5% for about an hour). This is for purchases. Refinances are a bit higher, so additional quotes apply. My feeling is that this WILL spark the interest of home buyers, and that activity in the new year will be renewed, and that it will spark the activity the government is hoping for. Why are rates so low? Who cares…take it for what it is, if I can be so blunt.
What else can I write about this week? I already hit the climax…the rates! Should I write about the deal that almost didn’t close because the appraisal was almost denied for high land/value ratio, or the builder we had to deny for a construction loan (a well known one at that)….. I better not. It’s too negative! But I will summarize to only say that things are tight. Banks are tight because they can be. But wasn’t it this way 7 or 8 years ago? Yes it was, but who can remember back that far? I surely cannot.
I would like to address builders. I predict that this is the next industry to be really affected by our economic downturn (recession!). In fact they already are. Track builders mostly, who build specs. But custom builders too. They are being squeezed , and in some cases cut off, by banks . The strong builders are surviving, and are being required to put more equity in deals. Gone are the days of 100% cost lending. So, in turn, builders with inventory worried . They cannot get more lines to build more homes. Many will unfortunately go under. Spec lending is on hold with many banks, including ours. The banks just don’t want the risk. So I sit here and think what this could mean for consumers: (a) Good deals on new construction (b) less inventory , and that will cause inventory homes to be more expensive. (c) less new homes, for now. ONLY MY PREDICTION that has no merit other than my own.
hope you are enjoying the holidays! Have a great week, and keep saying your prayers. Its working. Oh, by the way, the 30 and 15 fixed being the SAME is not a typo…….strange, but true.
What else can I write about this week? I already hit the climax…the rates! Should I write about the deal that almost didn’t close because the appraisal was almost denied for high land/value ratio, or the builder we had to deny for a construction loan (a well known one at that)….. I better not. It’s too negative! But I will summarize to only say that things are tight. Banks are tight because they can be. But wasn’t it this way 7 or 8 years ago? Yes it was, but who can remember back that far? I surely cannot.
I would like to address builders. I predict that this is the next industry to be really affected by our economic downturn (recession!). In fact they already are. Track builders mostly, who build specs. But custom builders too. They are being squeezed , and in some cases cut off, by banks . The strong builders are surviving, and are being required to put more equity in deals. Gone are the days of 100% cost lending. So, in turn, builders with inventory worried . They cannot get more lines to build more homes. Many will unfortunately go under. Spec lending is on hold with many banks, including ours. The banks just don’t want the risk. So I sit here and think what this could mean for consumers: (a) Good deals on new construction (b) less inventory , and that will cause inventory homes to be more expensive. (c) less new homes, for now. ONLY MY PREDICTION that has no merit other than my own.
hope you are enjoying the holidays! Have a great week, and keep saying your prayers. Its working. Oh, by the way, the 30 and 15 fixed being the SAME is not a typo…….strange, but true.
Friday, December 5, 2008
Rates down to 4.875%, be careful what you wish for!
Merry Christmas….oh, is it not Christmas yet? I thought the 4.875% 30 Fixed I saw this morning was Santa’s gift to me for being such a good girl this year. Then it vanished into thin air hours later, and we are at 5.25% . We should be careful what we wish for. Rates are extremely low, but the economy is in the tanker. There are so many things making the yields (rates) of bonds go down on a daily basis. Remember that yields/rates down means prices are up. Prices up means that there is more demand for bonds. This happens when investors lose confidence in stocks, and they buy more bonds. For the mortgage coupons these days, no one seems to know what they are buying. The spreads between buying a point are unreal, anywhere from .500% - .750%. Never in 14 years have I seen that much of a spread. So save your money to buy that point down, otherwise, you will be paying dearly in the interest rate.
Some headlines for you, that affect the market in every way: Foreclosures have risen in every state in the nation (out just hours ago), foreclosures are forecasted to double in 09, California is on the verge of literally running out of money (all of Arnolds muscle flexing and charm means nothing now!), car giants are folding, we are officially in a recession (since Dec 07- ya think?), major corporate layoffs, terrorist attacks in Mumbai, changing regime in USA for the presidency, and to top all this off, there are pirates attacking ships off the coast of Somalia. Pirates? Are we living in some fairy tale now? Some days it sure feels like it.
But let’s look at the bright side! Gas is under $2.00/gallon, every consumer product imaginable is on sale, cars prices are rock bottom, and we have a new President that has given hope to the country, and seems like the world. There are right this very minute, 4,000 job openings in the Texas Medical Center that need to be filled. Houston is adding jobs! The Medical Center led us through the 80’s, and it will lead us through this, I can assure you.
I had a thought this week that should solve our country’s problems: why don’t we use part of lottery winnings to finance these bail outs!? The mega jackpot was $146 million! Who needs that kind of money anyway?
Some headlines for you, that affect the market in every way: Foreclosures have risen in every state in the nation (out just hours ago), foreclosures are forecasted to double in 09, California is on the verge of literally running out of money (all of Arnolds muscle flexing and charm means nothing now!), car giants are folding, we are officially in a recession (since Dec 07- ya think?), major corporate layoffs, terrorist attacks in Mumbai, changing regime in USA for the presidency, and to top all this off, there are pirates attacking ships off the coast of Somalia. Pirates? Are we living in some fairy tale now? Some days it sure feels like it.
But let’s look at the bright side! Gas is under $2.00/gallon, every consumer product imaginable is on sale, cars prices are rock bottom, and we have a new President that has given hope to the country, and seems like the world. There are right this very minute, 4,000 job openings in the Texas Medical Center that need to be filled. Houston is adding jobs! The Medical Center led us through the 80’s, and it will lead us through this, I can assure you.
I had a thought this week that should solve our country’s problems: why don’t we use part of lottery winnings to finance these bail outs!? The mega jackpot was $146 million! Who needs that kind of money anyway?
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