Friday, mortgage rates jumped from 5.875% to 6.25% as mortgage-backed securities traders joined the world wide sell-off. Global stock markets plunged Friday and the Asian markets were weak for Monday. Investors world wide don’t want to be invested in ANYTHING.
When the world panics, we FLOAT mortgage rates. So, roll the projectors! The movie “Float Club” is playing all week.
Interestingly enough, gold isn’t skyrocketing in price. Long held as a “safe haven” during times of turmoil, investors are opting to hold their portfolios in cash instead:
Bullion is down 15 percent this month as the dollar climbed to a two-year high against the euro and the Standard & Poor’s 500 Index headed for its steepest monthly loss since 1938.
`We’re seeing some consolidation in the market today as investors pause for breath following the roller-coaster we had last week,” Zhu Lv, research manager at Shanghai Tonglian Futures Co., said from Shanghai today.
Gold for immediate delivery gained as much as 1.7 percent to $746.91 an ounce, and traded at $735.33 at 10:29 a.m. in Singapore. The metal fell below $700 on Oct. 24. Silver for immediate delivery was up 1 percent at $9.4575 an ounce.
Gold still benefits from its safe haven properties, although these days, more and more are choosing to hold just cash instead, so it won’t be surprising to see gold below $700 again,” said Zhu.
What’s that mean? It means that while investors are cautious, they aren’t completely terrified and that bodes well for mortgage-backed securities. When investors buy mortgage-backed securities, mortgage rates drop; that’s what we think will happen in the next 7-10 days.
I cautioned borrowers to lock in all October closings last week when mortgage rates dipped below 6%. That opportunity had a short-lived window. Like all panics, reason eventually prevails. Central banks world wide are slashing interest rates to avoid an economic recession. This make US dollar denominated investments, especially mortgage-backed securities more attractive.
Hold out for a mortgage rate below 6% if you’re closing in November.
Originally posted on Millionaire Real Estate Lender
Last 5 posts in Mortgage Rates
- A Kick in the Stomach? by the Fed? - November 5th, 2009
- So... What did the Fed do? - November 4th, 2009
- Home Refinancers Save $3 Billion - November 2nd, 2009
- So, How's the Mortgage Market Today? - October 29th, 2009
- RateWatch October 28 - Sustainable? Depends on what you mean. - October 28th, 2009
- Stumble it!
- Categories: Mortgage Rates
Comments
12 Comments so far
carol pulliam
We need three est. of sales in my area 5300 sky pkwy. 95823
Brian Brady
I don’t understand your request, Carol. Do you need a valuation for a specific property?
John
I close at the end of November..I’m currently floating at 6.5 with a point…Do you think I can do better?
Brian Brady
Check the last line, John (Yes)
Jennifer Monastero
Brian- what if John has an FHA Jumbo, and a 618 credit score? Saying that he can ‘do better’ without knowing any particulars is pretty risky. Even daring.
Brian Brady
Jennifer’s correct but John hasn’t hired me for that advice; he hired someone else. I don’t have a fiduciary duty to John. John’s question is the equivalent of the many people who see me in the supermarket and ask if I think if rates are going up or down.
I’m glad you brought that up, Jennifer because it ties into the pot you made, advising borrowers to “never pay upfront fees”. If a borrower doesn’t pay my application fee, he/she wouldn’t have the benefit of my specific market expertise and would only be offered to the general advice I just gave John.
Onlookers, this is a great lesson about the “something for nothing” philosophy Jennifer recommends. Quality advice costs money and requires some sort of commitment. Don’t believe me?
Ask your neighbors who bought a home, 2-3 years ago, with the promise of “no money down and refinance later”. That’s what you get for “no money out of pocket”. Professionals will require some sort of commitment from you.
John, I don’t know your specific loan program so my advice is general. Please don’t put it in the comments section; I don’t respond to specific loan requests in public. John, you can call me at 858-777-9751 should you want specific advice.
Jennifer Monastero
“Ask your neighbors who bought a home, 2-3 years ago, with the promise of “no money down and refinance later”. That’s what you get for “no money out of pocket”. Professionals will require some sort of commitment from you.”- are you saying that some of those very loan officers did not ask for up front money? I’d be willing to bet some of them did.
rc
In your professional opinion, what do you forecast the interest rate will be in November? I’m a buyer waiting hanging out on the fence hoping for interest rates to fall. When would be an ideal time to purchase? Thank you for your response.
Jayne-Ann Tenggren
John. Great website. My husband and I are supposed to be closing on a house next week in Sherman Oaks (Los Angeles). A 3,000 sq ft SFH, sale price 1,105,000. We had a loan, then it got frozen so we went looking for another loan. In the time frame and new qualifying criteria we came up with a 7 year Arm @ 6 1/4%, no point, 25% down. We know we don’t want to be in this property for the rest of our lives (I’m 41, my husband’s 50). Another loan company has offered (yesterday) 30 year fixed @ 6.875%, with 1 point, 25% down. After talking with this loan officer we ended up discussing whether we should be buying at all. Seemed as though when we said we were leaning toward the ARM, the fixed loan guy flt it was way too risk. That he believed the property will go into negative equity and we should have a fixed. We feel if that’s true, it’s an argument for bailing on the whole deal and takes the hit of losing the deposit, if we could buy a similar house later for less. We’re not in a chain of sales FYI. Our original thought was to do the arm and then refinance IF it turns out we wanted to stay longer than the 7 years, but now are confidence is rocked. Do you have an opinion??? Obviously, this is time sensitive…on the other hand the deal isn’t closed yet!
Brian Brady
Hi Jayne-Ann:
The property would go into negative equity, in 7 years, with a 25% down payment, in Sherman Oaks? If that materializes, it would be devastating.
California real estate is cyclicaly volatile; no doubt. Steep declines are followed by rapid price appreciation. Those cycles are documented. I completely disagree with the second originator’s assessment of the Valley real estate market; it’s overly pessimistic. If you agree with him, don’t buy the house and pull all of your money out of banks and the stock market. Buy gold.
If you’re buying the home in Sherman Oaks for the prospect of price appreciation (and you should consider that as a reasonable prospect), the 7/1 ARM works well. You might contact me as I would structure it a much different way, giving you a much lower rate (5.75%). You can call me at (858)-777-9751
Brian Brady
NB: I made a loan program, without full knowledge of the borrower’s financial status. Normally, I’d be the first to criticize an originator who does such a thing.
In this case, I have a pretty good idea of the borrower’s industry and reasonable suspicion of her accomplishments. I’ve financed people in this industry, for a loan amount she wants, with half the experience the borrower has.
It’s an educated guess.
Mortgage Rates in November, 2008 | Mortgages Unzipped
[...] suggested that home buyers closing in October should lock at 5.875% and that homebuyers closing in November might w…. Soon thereafter, mortgage rates spiked to 6.5% causing those folks closing in November to [...]