Mortgage Market Update

Well, here we are on a Friday and it’s time for a brief look at today’s market and what’s happening in the mortgage world.If you look at what I wrote last night in Why Mortgage Rates Are Going Up, you won’t be surprised that rates are indeed higher today.   A couple of thoughts about what’s going on in the markets right now:

 

• The government is increasing quite dramatically the amount they are borrowing by means of Treasury auctions and that is making the market nervous.   Nervous = uncertain = higher rates.
• All of the talk about financial regulations is also making the market nervous.   (Repeat equation about nervous = uncertain = higher rates).

The volatility in the mortgage backed securities market is increasing and that trend isn’t friendly in terms of interest rates.

Because of those issues, my recommendation is to Lock all loans.   I’m putting the “odds” at 80% that we’ll see rates trending upward over the next 30 to 60 days and 20% that we’ll see rates trending downward during that time period.

I’m going to take a “page” from my friend, Rhonda Porter, who is one of the 5 lenders I spent a lot of time with brainstorming on Tuesday  in Chicago.   Rhonda is actually a loan officer out in Washington State and rather than saying, “Rates are at _______”  when she’s writing things like this, she quotes a “scenario” or two.   So I’m going to do things that way instead.   I think it will be more accurate and will give my readers a better picture of the market on that day.   Let me know what you think……

Rates today:
$400,000 purchase, 30 year fixed, with 10% down ($360,000 loan) with a credit score of 740 or higher, we’re at 5.625% with 0 pts or 5.25% with 1 pt.

$300,000 rate and term refinance, 30 year fixed at an 80% LTV with escrows and a credit score of 740 , 5.875% with .25 pts or 5.625% with .75 pts.

$250,000 FHA purchase with a 640 credit score, 30 year fixed, 5.0% with the seller paying 2.5 pts, or 5.5% with 1.25 pts.

June 19, 2009