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I wasn’t sure about the new trend of higher mortgage rates.  The nagging thought was that the Fed would continue or expand it’s open checkbook policy, buy mortgage bonds, and keep home loan rates artificially low.

When the whole market melted down, I said “don’t panic“; it was good advice.  Mortgage rates, which jumped from 4.625% to 5.5% in one week, retreated to 5%.  I jumped on that opportunity.  I’ve been cautiously optimistic for lower mortgage rates in late June.

Ben Bernanke’s testimony yesterday spooked me. I’m not so sure he wants to be Sugar Daddy Ben anymore.  I think he’s cutting back on the subsidies.  This signifies a change in “BIAS” for me.  Since January, I’ve been “biased” towards lower mortgage rates because of the milky Federal teat from which to nurse.

Will I still find an opportunity to float rather than lock? Certainly.  As long as there are traders, overreactions will provide that opportunity.  I think those opportunities will be fewer for the duration of 2009.

PS:  I’ve received over a dozen e-mails this week asking my advice on your loan-in-process.   If you are working with another mortgage adviser, you should speak with her first.  If your rate isn’t locked and you’re not getting daily updates from your loan adviser, you need to consider one of these professionals.

About the Author

I'm Brian Brady, a 19 year veteran of the industry. I started my career with Merrill Lynch, as a financial adviser, right after I graduated Villanova University. I worked in the downtown Philadelphia office. I moved out west in 1992 and have worked in residential real estate lending since 1994. I have originated loans, managed branches, was the National Sales Manager for a regional mortgage bank, and successfully turned around an ailing mortgage banking firm to profitability. I'm back to my first love; working with clients in a financial advisory capacity. I consider myself a Mortgage Planner, which is a new title for mortgage originators who have expertise in financial planning. This means that you'll get a whole lot more than rate and points from me. I'll show you how to properly structure your debt so as to increase your liquidity, safety and return on your investments. I'll even show you a tax trick or two to run by your CPA. Call me at my office at (858)- 777-9751

  • http://www.zillow.com/profile/MaryM Mary Miller

    I never thought I’d see the words “milky Federal teat” on this blog. I love your editorial creativity, Brian!

  • http://www.MortgageRatesReport.com Brian Brady

    I write these things early in the morning and sometimes write EXACTLY what is going through my mind. The imagery is graphic but it’s already out there so we might as well go with the slightly prurient thought.

  • http://www.zillow.com/profile/Andrew-Adams Andrew Adams

    Brian,

    You are a far braver man than I…I try and stay out of the rate prediction or prognostication business for the simple reason that in the current market anything seems possible.

    I have been leaning towrds lower rates myself…even in spite of the recent hikes on top of hikes. The volatility scares me a little bit.

    What keeps eating at me and making me think we will see the fed infuse a bunch of cash into the MBS market again is simply their credability. As recently as last wednesday when rates started to climb I was watching CNN and watching Obama telling everyone know is the time to refi. The fed made it pretty clear that wanted to keep borrowing costs low…not that mid 5’s is not low…The problem is the expectation that have been set of rates below 5%. I personally think Obama they will be taking a real credability hit if rates don’t get back to that level.

  • http://www.MortgageRatesReport.com Brian Brady

    “What keeps eating at me and making me think we will see the fed infuse a bunch of cash into the MBS market again is simply their credability”

    Bingo, Andrew! I have always thought it unwise to fight the Fed but it appears that the Fed is unwilling to fight back now.

    I learned something on this blog about six months ago. Lenders willingly renegotiate locks when rates move dramatically down. That’s a risky strategy to rely on but it seems to be policy rather than exception now.

    “I try and stay out of the rate prediction or prognostication business for the simple reason that in the current market anything seems possible.”

    then…

    “I have been leaning towrds lower rates myself…even in spite of the recent hikes on top of hikes.”

    Careful…you just prognosticated :) On another note, I’ve heard that H4H is making a comeback. You won’t be surprised to hear that I’m sticking to the “boring, old FHA/VA purchase business” rather than try and figure this new program out. Keep hammering away in New England, Andrew.

    I have an interesting question for the originators; at which rate range do you think we’ll eventually settle this summer? I’m “guessing” we’ll be around 5.125-5.5
    (CONSUMERS: we’re going to be guessing rather than prognosticating)

  • http://www.zillow.com/profile/Andrew-Adams Andrew Adams

    I have been thinking we would see + or – .125% on 5%, with swings higher and lower for short periods of time. I was thinking this was a short term swing up…particularly after the recoverry from last wednesdays mess. Since that and then some has been given up I think this may be the first of severel steps up in rates as the fed begins to move away from manipulating the rate markets and let the market set the rates. Currently…I am thinking we will see rates fluctuate + or – an .125% on 5.5% for awhile until the next step up. At some point the fed is going to have to let the markets be…I just didn’t expect the process to start so soon.

  • http://hstrial-oswingrant.homestead.com oswin grant

    I enjoyed the information you had to offer, I’m just glad that there are folks like you telling folks about ways to get some good help with their mortgage situation and I’m glad they are learning that there are ways to get out of this mess. I blog too and try to help out anyway I can on my site. Good stuff.

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