The Mortgage Manifesto

Mortgage Rates Improving On Ugly Stock Market

One side benefit of the stock market selloff is a dip lower in mortgage rates.

Lately, I've been pricing out deals like the following:

• 30 year fixed at 6.25% with ZERO origination & rock-bottom costs
• 5/1 ARM at 5.75% with ZERO origination

Looking forward, I don't really expect to see mortgage rates move much lower unless the entire economy begins to crumble, which seems like it could given the financial news headlines of late!

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If we see mortgage rates move lower, I'll be posting it here.

www.BrettGrendahl.com

I Sell Money & Knowledge

It's Time to Tell the Truth

That's what I was thinking as I read the news headlines today.

Doom.  Gloom.  Bad news after bad news.

The stories aren't that surprising to me, I was writing these same concerns a year ago in this forum, what is surprising is that the media outlets are finally catching on.  While the financial news media made it out that the Fed had saved us all from financial ruin when they stepped in to ail the sinking ship at Bear Stearns a few months ago the truth was hidden.

What is the truth?

Our economy faces major constraints.  Falling home prices, the erosion of value of the dollars in your pockets, and costs for essentials (gas, food, health) are rising at an insane clip.

Here's a personal example.  I recently raised the deductible on my family's health insurance to lower the monthly premiums we were paying.  Well, just this week I received the annual renewal statement that informed me of a rise in the premium.  What drove me crazy is that my premium is now higher than it was before and I also have a higher deductible.  Yeah.......WTF?

A sea change of thinking is underway.  How people spend their money is changing.

Some of it is forced and some of it is prudent planning.

www.BrettGrendahl.com

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Minneapolis Home Prices Plunge 15%!

Ick!  That's not a great headline is it? 

According to the Case-Shiller home price index released Tuesday by Standard & Poor's prices for homes in Minneapolis fell 15% in the past year.  We weren't the city with the highest decline, that honor goes to Las Vegas.  They were down 26.8%.

As with anything, prices can fall much faster than they go up.  This truism is playing out in the local real estate market.

The good news is that at some point, prices will fall to where is spurs demand.  That's when we'll see the beginning of a recovery.  However, it's going to take some time (probably 10 years or more) for prices to get back to the levels of recent years.

That's actually a good thing.

The super fast rise in home prices we saw only had the effect of making our dollars worth less.  They didn't really make us wealthier.  That would have only happened if prices did not fall like they are now.

Today's headline is an eye-grabber indeed. 

The good news there is that with media headlines like these we are one step closer to a market bottom.  Market bottoms only occur when the common thinking is that the market stinks.  That's the good time to get in.

If you are looking to buy a home and don't have one to sell (your not attached to the current market) you are in a prime buying position.  You have lots of inventory to choose from and lots of leverage to negotiate a great price.

www.BrettGrendahl.com

Consumer Confidence Falls & Mortgage Rates Do Nothing

In a sign of the times and how different they are from years past, today's Consumer Confidence report was the lowest reading since 1980.

Usually, on such a dismal economic report we'd see mortgage rates moving lower.  That's not the case these days.

The financial markets that create the system to bring mortgage financing to consumers is still constipated.  Throw in the "gun shy" attitude of the big institutions towards any mortgage related investment and there just aren't any real good reasons to see this change anytime soon.

www.BrettGrendahl.com

Harvard Agrees with Me

Officials from Harvard University's Joint Center for Housing Studies that the U.S. "is in the throes of a housing downturn shaping up to be the worst in a generation."

That's exactly what I thought last year.

The silver lining in this news, in my eyes, is that the daily pounding of the news media on this issue will accelerate this thinking to become cliche.  Once it reaches that point, we've likely hit bottom.

I'd wager we've reached the halfway point of this downturn that began it's turn in late 2006.  Early 2010 is most likely when prices are stabilized to present a market bottom.

www.BrettGrendahl.com

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Short Dip Lower in Mortgage Rates

The next few weeks should bring us slightly lower mortgage rates until the longer term trend for rising rates resumes.

Expect the benchmark 30 year fixed rate mortgage to drop to around 6.25%, possibly 6.125%, and then move back to the current 2008 high of 6.5% by mid-July.

www.BrettGrendahl.com

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Mortgage Rates Headed Higher

Say "good-bye" to 30 year fixed rates under 6%.  We won't see those again anytime soon. 

The forecast for the remainder of 2008 is for gradually rising mortgage rates.

Some big news from me next week.  Stay tuned.  If you've ever wondered how you can learn to make money in the stock market like a pro the answer to that exciting question is coming.  You won't find anything like what a partner and I are launching next week.

Brett

The Ever-Quieting Market

As the real estate market & the mortgage industry have the feel of ghost towns lately there's not much to report on a day to day basis anymore.

My prediction for rising mortgage rates for the remainder of 2008 seems to still be our best guess on the near future.

Underwriting guidelines continue to tighten, lenders continue to eliminate loan programs, home equity loan programs are getting very difficult to find, and it just seems like very few people are eager home buyers these days.

My level of production is at the slowest pace in 10 years.  That's given me a LOT of time and I've been busy.  At what?  Well, check back with me on June 6th and you'll find out. 

If you like making money, you are going to be intriqued by the new venture.

www.BrettGrendahl.com

Mortgage Rates not Really Doing Anything

Not too much to report regarding mortgage rates lately and the next 12 months will likely have slightly higher mortgage rates.  Until some future certainty returns to the mortgage-backed securities marketplace I don't see any other plausible outcome.

Underwriting guidelines continue to tighten while property values feel downward pressure.  The bottom line, there are less potential real estate financing options available than there have been for at least 7 years.

For those of you that seek ways to make money, I have some exciting news to share with you.  However, I can't give you the official word until June 6th.

Stand by....

BG