Well I'm back to a reasonable turn around on my return phone calls to you - I apologize for all of the commotion that last couple of weeks.
The Bond Markets improved a little today on news that consumer spending softened and a rise in new unempolyment claims. Remember that the bond markets normally improve on BAD NEWS - seems unfair, doesn't it?
As far as mortgage rates, there was a slight improvement this morning by 1/8%.
Remember that the Fannie Mae/Freddie Mac increased delivery fee takes affect this month.
For those of you who are watching rates, I am factoring that into my quotes already for you so that you are not taken by surprise.
For those of you already locked - we have 2 deadlines to close your loan - one group needs to close by Feb. 11th the other by Feb 25th. If you are unsure as to your deadline please feel free to e-mail Kristy at kelrod@franklinbank.com or call her at 517-783-5390 as it is imperative to close by the required date to protect your current rate lock.
As promised, I will keep you updated as relevant market news or changes comes out.
-Jon
Thursday, January 31, 2008
Wednesday, January 30, 2008
Feds Cut Rate By 1/2% - As Expected
The Fed meeting has led to another 1/2% cut in rates, but as I mentioned this morning, the markets had already anticipated this cut in their trading. Mortgage backed securities actually fell this monring causing a small increase to rates.
I will continue to monitor events closely as there is much expected in the way of more economic news this week.
Those of you on the Rate Watch monitor should expect almost immediate notifications as the markets change.
-Jon
I will continue to monitor events closely as there is much expected in the way of more economic news this week.
Those of you on the Rate Watch monitor should expect almost immediate notifications as the markets change.
-Jon
Mirror, Mirror On The Wall, Will The Feds Make Rates Fall...
OK - so it is early in the morning and I couldn't think of much more.
We're expecting to see a 1/2 point cut in rates today. But other economic data is going to be the bigger surprise as the markets have already priced in the rate drop to the Fed Funds rate.
The link below shows the calendar of other data being released this week:
http://originatortimes.com/content/templates/brm.aspx?articleid=549&zoneid=2
The biggest issue is still inflation - if the market feels that the cuts by the Feds are too aggressive, stoking inflation, we could actually see an INCREASE in mortgage rates. The following LA Times article gives you some insight to this:
http://www.latimes.com/business/la-fi-fed29jan29,1,7644615.story
I will keep you posted on the outcome later this afternoon.
We're expecting to see a 1/2 point cut in rates today. But other economic data is going to be the bigger surprise as the markets have already priced in the rate drop to the Fed Funds rate.
The link below shows the calendar of other data being released this week:
http://originatortimes.com/content/templates/brm.aspx?articleid=549&zoneid=2
The biggest issue is still inflation - if the market feels that the cuts by the Feds are too aggressive, stoking inflation, we could actually see an INCREASE in mortgage rates. The following LA Times article gives you some insight to this:
http://www.latimes.com/business/la-fi-fed29jan29,1,7644615.story
I will keep you posted on the outcome later this afternoon.
Tuesday, January 29, 2008
The Mortgage Perfect Storm
I left off last time talking about the Mortgage Perfect Storm.
Many of you are inquiring about the direction of rates in the near future, so here is my insight:
Rates will remain VERY volatile this year - why? Because the markets are receiving mixed messages on several different fronts. I am going to comment about them below.
What concerns me more than the volatility of rates are the changes we are seeing in the mortgage industry in regards to lending criteria and falling values.
Here are some comments about rates:
1.) The Feds are currently reducing rates to provide liquidity to the markets and fend off a pending national recession (too bad they haven't been paying closer attention to Michigan, which has been in a single state recession now for well over a year) When the Feds reduce short term rates it can have the affect of reducing longer term mortgage rates as well. The key to whether mortgage rates fall in relation to the short term rates is the amount of inflation, risk and demand present in the market for mortgage backed securities.
In other words, if the Feds reduce short term rates a lot (like they did last week) and bond traders on Wall Street feel that this move will curb a recessionary period, land the economy on solid ground and potentially produce a stonger economy and thus increases in the cost of goods - they will see that as an inflationary move and potenitally sell out of long term bonds causing RATES TO GO UP. This is what we saw temporarily last week.
2.) The credit markets are still very sore from the loan losses incurred from mixing sub-prime mortgages with traditional mortgages and suffering from increased default rates as a result. Investors are now very skeptical of putting their money back into anything mortgage related. This causes a lack of demand and thus a liquidity crunch because there is less money to lend.
Here are the 2 BIGGEST Issues I see this year:
3.) Lending Criteria and Falling Values - The biggest problems I see this year is that lenders are tightening their belts with credit standards. I have seen more changes in 90 days than I have in the last 7 years. No Ratio loans have been eliminated, 100% financing has for the most part been eliminated and risk based pricing (higher rates - the riskier the loan) is just a sample of change.
Falling property values will become exacerbated with the implementaion of these new guidelines. What I mean, is that we were already seeing a smaller borrower pool due to the Michigan economy, but with fewer loan programs to choose from, there will be fewer buyers - this will force the market to reduce prices even more as more competition for homes on the market increase.
The only good news to all of this is that you will eventually see a balance between homes on the market and buyers willing to buy them. When will this happen? Hard to say.
I will plan on updating this with comments as news is received.
Congratulations to the many of you who listened to my advice and have or are in the process of getting out of ARMs, or improving rate!!!
If you have not had the opporutnity to benefit from the recent moves, I do believe that we will see another swing in the next 60 days. The best thing to do is be prepared - I have created a Rate notification by e-mail alert that should help. We just have to keep our fingers crossed that more mortgage programs are not eliminated and that values hold steady.
Until the next post - Jon
Many of you are inquiring about the direction of rates in the near future, so here is my insight:
Rates will remain VERY volatile this year - why? Because the markets are receiving mixed messages on several different fronts. I am going to comment about them below.
What concerns me more than the volatility of rates are the changes we are seeing in the mortgage industry in regards to lending criteria and falling values.
Here are some comments about rates:
1.) The Feds are currently reducing rates to provide liquidity to the markets and fend off a pending national recession (too bad they haven't been paying closer attention to Michigan, which has been in a single state recession now for well over a year) When the Feds reduce short term rates it can have the affect of reducing longer term mortgage rates as well. The key to whether mortgage rates fall in relation to the short term rates is the amount of inflation, risk and demand present in the market for mortgage backed securities.
In other words, if the Feds reduce short term rates a lot (like they did last week) and bond traders on Wall Street feel that this move will curb a recessionary period, land the economy on solid ground and potentially produce a stonger economy and thus increases in the cost of goods - they will see that as an inflationary move and potenitally sell out of long term bonds causing RATES TO GO UP. This is what we saw temporarily last week.
2.) The credit markets are still very sore from the loan losses incurred from mixing sub-prime mortgages with traditional mortgages and suffering from increased default rates as a result. Investors are now very skeptical of putting their money back into anything mortgage related. This causes a lack of demand and thus a liquidity crunch because there is less money to lend.
Here are the 2 BIGGEST Issues I see this year:
3.) Lending Criteria and Falling Values - The biggest problems I see this year is that lenders are tightening their belts with credit standards. I have seen more changes in 90 days than I have in the last 7 years. No Ratio loans have been eliminated, 100% financing has for the most part been eliminated and risk based pricing (higher rates - the riskier the loan) is just a sample of change.
Falling property values will become exacerbated with the implementaion of these new guidelines. What I mean, is that we were already seeing a smaller borrower pool due to the Michigan economy, but with fewer loan programs to choose from, there will be fewer buyers - this will force the market to reduce prices even more as more competition for homes on the market increase.
The only good news to all of this is that you will eventually see a balance between homes on the market and buyers willing to buy them. When will this happen? Hard to say.
I will plan on updating this with comments as news is received.
Congratulations to the many of you who listened to my advice and have or are in the process of getting out of ARMs, or improving rate!!!
If you have not had the opporutnity to benefit from the recent moves, I do believe that we will see another swing in the next 60 days. The best thing to do is be prepared - I have created a Rate notification by e-mail alert that should help. We just have to keep our fingers crossed that more mortgage programs are not eliminated and that values hold steady.
Until the next post - Jon
Thursday, January 24, 2008
Feels Like A Trip To Cedar Point!!
OK - as promised to many of you, I am going to use this to keep you updated of market actions, commentaries and what's going on in general with mortgages. Many of you reading this right now already have loans in process or are tyring to get your loan locked.
For those of you who are locked - great! - Kristy and I are working around the clock (literally) to get your loan wrapped up before anything adverse happens (rate lock expirations, changing or deleting loan programs, an uneventful sale of a foreclosure in your neighborhood that drops property values even further, etc.)
For those of you who have not locked - sit tight - I am monitoring things very closely and I am also constructing an e-mail distribution list this weekend that will notify you immediately if I see the opportunity again.
Enough about housekeeping items - the markets are the most volatile that I have seen in 15 years. On Wednesday of this week I saw the single largest decrease ever - unfortunately the markets took it away from me in less than 3 hours - needless to say it is gone and today the rates are back up to were they were at the very beginning of the year. It is like riding a roller coaster at Cedar Point - Up & Down, Up & Down. Currently the stock market is up as I write this and there appears to be a shift back out of bonds and into the equity markets - this will cause rates to increase - at least temporarily.
MY COMMENT ABOUT RATES - This will be the most volatile year ever for mortgage rates.
Later tonight or tomorrow, I will put up a post as to why and how we can take advantage of this volatility in rates and what I am calling the The Perfect Mortgage Storm and how to navigate your way safely through it.
- Jon
For those of you who are locked - great! - Kristy and I are working around the clock (literally) to get your loan wrapped up before anything adverse happens (rate lock expirations, changing or deleting loan programs, an uneventful sale of a foreclosure in your neighborhood that drops property values even further, etc.)
For those of you who have not locked - sit tight - I am monitoring things very closely and I am also constructing an e-mail distribution list this weekend that will notify you immediately if I see the opportunity again.
Enough about housekeeping items - the markets are the most volatile that I have seen in 15 years. On Wednesday of this week I saw the single largest decrease ever - unfortunately the markets took it away from me in less than 3 hours - needless to say it is gone and today the rates are back up to were they were at the very beginning of the year. It is like riding a roller coaster at Cedar Point - Up & Down, Up & Down. Currently the stock market is up as I write this and there appears to be a shift back out of bonds and into the equity markets - this will cause rates to increase - at least temporarily.
MY COMMENT ABOUT RATES - This will be the most volatile year ever for mortgage rates.
Later tonight or tomorrow, I will put up a post as to why and how we can take advantage of this volatility in rates and what I am calling the The Perfect Mortgage Storm and how to navigate your way safely through it.
- Jon
Wednesday, January 9, 2008
When Will The Bleeding Stop!?!
Every morning I come into the office it seems as though there is more bad news in the headlines regarding the mortgage industry. In Saturday's front page of the Ann Arbor news it read:
"Foreclosures Up 90%" - Geez, like we need to be reminded?
All of the bad news goes against my general nature - I am an eternal optimist. But the facts are hard to ignore - there is some ugly stuff going on out there.
The most recent item that everyone should be aware of is the upcoming increase in rates by Fannie Mae and Freddie Mac - this is going to take place on 3/1/08 and it is going to happen nationwide.
In general, every new borrower is going to be charged an extra .25 discount point. If your credit scores are below 660 (hang on to your shorts) the fee increases to .75 points all the way up to 2.0 full discount points - all depending on your credit score.
In short - if you are going to be doing any kind of mortgage financing - BEST DO IT NOW!!
For those of you who are real analytical I have the actual Fannie Mae release with all of the relevant data if you would like to see it. Feel free to call my office.
Well, regardless of the crummy stuff happening out there in the mortgage world, I'm really looking forward to this year - my oldest son graduates, my wife turns 40 and my sister-in-law is getting married - great year for a lot of parties and family 'shin digs'!!
Speaking of family, you should check out the video I attached over on the right. It's from my trip up north during Christmas Break - my son darn near broke his neck sledding. I'm the first one to go down the hill - he is the second - you won't miss him.
You're sure to laugh watching it, but when it happened I was scared to pieces and I definately won't be laughing when I get his chiropractor bill - OUCH!!
"Foreclosures Up 90%" - Geez, like we need to be reminded?
All of the bad news goes against my general nature - I am an eternal optimist. But the facts are hard to ignore - there is some ugly stuff going on out there.
The most recent item that everyone should be aware of is the upcoming increase in rates by Fannie Mae and Freddie Mac - this is going to take place on 3/1/08 and it is going to happen nationwide.
In general, every new borrower is going to be charged an extra .25 discount point. If your credit scores are below 660 (hang on to your shorts) the fee increases to .75 points all the way up to 2.0 full discount points - all depending on your credit score.
In short - if you are going to be doing any kind of mortgage financing - BEST DO IT NOW!!
For those of you who are real analytical I have the actual Fannie Mae release with all of the relevant data if you would like to see it. Feel free to call my office.
Well, regardless of the crummy stuff happening out there in the mortgage world, I'm really looking forward to this year - my oldest son graduates, my wife turns 40 and my sister-in-law is getting married - great year for a lot of parties and family 'shin digs'!!
Speaking of family, you should check out the video I attached over on the right. It's from my trip up north during Christmas Break - my son darn near broke his neck sledding. I'm the first one to go down the hill - he is the second - you won't miss him.
You're sure to laugh watching it, but when it happened I was scared to pieces and I definately won't be laughing when I get his chiropractor bill - OUCH!!
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