Fed Getting out of the Market

Only 12 weeks remaining of the Fed MBS purchasing program.  I’ve blogged this before but let’s recap.

The fed planned to spend 1.25 trillion dollars buying mortgage backed securities, which are really just bundles of loans, like yours, that are sold on a secondary market, like stocks and bonds.  They have spent over 1 trillion and with only 12 weeks remaining will be winding down this program.  Why should you care?

Since the secondary market is like any other and responds to supply and demand, when there is less demand, investors will need to be enticed to buy.  How do you do that?  With larger returns.  In this case returns are created by the interest rates, so you can see that higher rates will be needed.  This is of course passed on to the consumer, meaning home loan rates are expected to go up. 

If you or anyone you know has been on the fence, to buy or refinance, time is running out.  We may or may not see one more dip before the 12 weeks is up, but rest assured that unless the Fed extends the program, rates will go up.

Couple higher rates with foreclosures and short sales, we can expect a slight loss in the (small) gains we saw late last year in housing prices.  As rates go up the buyers lose purchasing power and are less likely to buy higher priced homes. 

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Thank you,
Matt Steinmetz
Envoy Mortgage- Voted Top 25 Tech Savvy Lenders by Mortgage Technology Magazine
2151-A2 Salvio St.
Concord, CA 94520
Phone 925-671-9501 x119

Learn When to Pay Points
Information about the $8,000 First Time Buyer Tax Credit
Information about the $10,000 New Home Tax Credit in CA
Apply for a loan online

FHA* VA * CALPERS * CALVET * FHA 203K Rehabilitation Loans * Energy Efficient Mortgages

Rates are looking Great!

Rates are 1/8% from the lowest rates ever!  Should we be talking about your possibilities?  Call me today.

Thank you,
Matt Steinmetz
Envoy Mortgage- Voted Top 25 Tech Savvy Lenders by Mortgage Technology Magazine
2151-P Salvio St.
Concord, CA 94520
Phone 925-671-9501 x119
Fax 925-940-9639
msteinmetz@envoymtg.com

Visit my blog for my most recent mortgage related update.
Learn When to Pay Points
Information about the $8,000 First Time Buyer Tax Credit
Information about the $10,000 New Home Tax Credit in CA
Apply for a loan online

FHA* VA * CALPERS * CALVET * FHA 203K Rehabilitation Loans * Energy Efficient Mortgages

Best Pricing Since May

For those of you who have been sitting on the fence…

Waiting for rates to come down again, that time is here.  Today rates were the lowest they have been since May.  If you recall towards the end of May, rates jumped ½% in one day and even more over a few weeks.  Finally, we have reached those lows again. 

We are currently around the 4.875% marker for a no point 30 year fixed conforming loan⁽¹⁾, for qualified borrowers.  Next Tuesday will bring us retail sales for August and this is expected to be a big market mover.  Whether or not this will be good or bad news for rates is unknown, but it is expected to be good. 

If you or anyone you know is considering a refinance, call me right away to get your paper work in line and ready to lock the best rates we’ve seen in months. 

This is also a great time to buy with rates and prices this low.

(1)     Based on credit scores above 750, primary residence, an impound account, and other qualifying factors.  Call for more info.

Thank you,
Matt Steinmetz
Envoy Mortgage- Voted Top 25 Tech Savvy Lenders by Mortgage Technology Magazine
2151-P Salvio St.
Concord, CA 94520
Phone 925-671-9501 x119

Learn When to Pay Points
Information about the $8,000 First Time Buyer Tax Credit
Information about the $10,000 New Home Tax Credit in CA
Apply for a loan online
 
FHA* VA * CALPERS * CALVET * FHA 203K Rehabilitation Loans * Energy Efficient Mortgages
 

A 2nd Stimulus Plan and more Foreclosures

Vice President Joe Biden said the current administration may have miscalculated the jobless problem facing America, as to how bad it would be.  Another stimulus plan would mean more Treasury auctions.  You know from my previous posts that Treasury auctions can take money away from bonds and increase mortgage rates.  A new plan would also cause inflationary problems which would also mean higher rates. 

Many Banks that held off on foreclosing on delinquent mortgages are now planning to move forward.  A lot of banks held off because they signed up for Obama’s Home Stability Plan, but reports show that a large amount of  the loans that have been modified by the lender are still delinquent.  People are still not paying their mortgages, even after modifications go through.  Not only does this clog up the modification departments for those who want help and would pay, but it tells the lenders the pograms don’t work and perhaps foreclosure is the way to go.  Either way, a new wave of foreclosures is on the horizon and this will depress home values further.  This is good news if you are in the market to buy. 

Matt Steinmetz

Envoy Mortgage

Unemployment up

Today the unemployment rate is at it’s highest since 1983, sitting at 9.5%. The US has now seen the biggest drop in jobs since post World War 2, with about 6.5 million jobs lost since the recession began in December 2007.

This is not all doom and gloom as this should help mortgage rates improve along with the fact that the Dollar is getting stronger and oil prices are going down again. Oil prices going down pressures the entire stock market to sell off, and we know from earlier posts that when stocks sell off, that money usually ends up in bonds. This also helps rates improve.
With that said, where the bond market is today, the last time it sat here it reversed for the worse. Since rates are tied to the bond market, we certainly hope this doesn’t happen again. With the markets closing early today and closed tomorrow, a sell off would not be uncommon. You can see why it is impossible to know what rates will do, so many factors involved.

Watch for my next post about the FHA 203K laon for rehabing or repairing your home, or a home you want to buy.

Matt Steinmetz

See Saw

 The ADP report came out today with much worse unemployment data than expected, though better than May numbers .  Tomorrow is the official day for the jobs report and the ADP report is not totally reliable it is a sign that June was not a good month for employment figures. An unstable economy may push investors to the bond market for safety which would help improve mortgage rates. Counteracting this event is China’s manufacturing sector, which is currently expanding. This gives the stock market a boost as investors may feel that the global economy may be recovering. Remember stocks and bonds are usually on a see-saw so when investors put money in one, they take money out of the other. For mortgage rates to improve investors need to put their money in the bond market.
Though rates are still great and in the 5’s, the weekly mortgage application report shows applications are down 18.9% per the Mortgage Bankers Association.  Have a great  day, as of today the week and the year are half over. 

Oh and California is broke and paying people with IOU’s!   This will affect the nation as CA consists of 12% of the nations gross national product. 

Feel free to comment or share below.

06/25/2009

This week rates have been holding steady in light of the fact that the Treasury is selling off Treasury Bonds to create capital. This creates competition, as money that goes into the treasury market could have gone into bonds and helped lower rates. Perhaps the Fed has been buying mortgage bonds, or will buy the treasury bonds to help clear the supply. See my post below about supply and demand.