The Mortgage Manifesto

A Mixed Bag for Mortgage Rates

Just a quick post to keep everyone I care about in the loop on mortgage rates.

After we saw those 2 year lows a few weeks back those appealing rates quickly vaporized as the markets worsened when the Fed only cut their Overnight Rate by 0.25.  Once again, let this experience be a lesson.  Mortgage rates do not move in lock-step with the Fed's actions, they move in response to what bond investors THINK about what the Fed did.

After rising higher I see technical signs that indicate the improving trend might have more gas in the tank.  So, you are wondering, when might we see those 2 year lows again, right?

It will probably be a few weeks and maybe as long as until February 2008.  Don't miss out when they come around again.  If you are not already receiving my need-to-know email alerts shoot me an email at brettg (at) tidalwavecapital.com and I'll make sure you don't miss out on important news that can save you money.

Thank you for your readership, it means a lot to me.  Wish you the best this holiday season!

Brett

Fannie & Freddie Tightening The Screws, on You

Can we really call continue to call it a subprime problem when Fannie Mae and Freddie Mac have added a 0.25 fee charge to ALL new conforming mortgage programs REGARDLESS of your credit score, income, down payment, or any other strong, and typically prime borrower situation.

Nope!

This contagion in the mortgage markets is spreading like a virus.  Too bad no one has any immunization!  This runs from low and high income borrowers, big and small mortgage companies, the titans of Wall Street, and banks located on foreign shores.

What would you call it?

Mortgage loan programs continue to evaporate like a mist into the ether, and the ones you can find become more expensive as times passes by.  Government regulation beckons and consumer choices are reduced.  Put these all together and you have one big brake overpowering the economy.  We are beginning to see the general media catch up with our thinking from months ago.  Remember?

The weird thing is that I have my highest month of production since last March.  Weird, not really.  My competition that entered the business after I are leaving in droves.  Good for me, and good for you and your friends too.  The ones that remain understand this business is about protecting our clients finances and future, not taking advantage and pilfering them!

Brett | Grendahl

Bobbing on the Subprime Ripples

For many months that seem like many years, I have been informing you about how the "contained" subprime mortgage finance collapse was fiction.

Get ready to brace yourself for yet another ripple effect.

Once upon a time, you thought you were prime!

Coming this January, Fannie Mae is imposing a new pricing schedule in which your FICO score becomes more important than ever before.  Where is the strike zone?  If you are looking at a mortgage finance need at greater than 70% of the property value you get hit with higher fees if your score is anywhere in between 620 and 679.

Gone are the days when a score of 640-679 is A credit for mortgages.  The pricing adjustmens are steep!  Depending upon your exact credit score, should you fall in the strike zone, the extra costs can range anywhere between 0.75 to 1.75 in discount points to up to 0.5 higher interest rate.  Someone say it for us all; OUCH!

Yes, this really sucks.  Even though you might pay your bills and have no intention to move anytime soon, the current value of your home and the possible financing options available continue to dwindle and evaporate.

That is the froth on top of these subprime shockwave ripples.  Unfortunately, the froth equates to less consumer choice.

In my business, the norm of the day is a jump back in time.  My competition continues to leave the business they thought was a piece of cake, lenders disappear, underwriting guidelines get back to sanity, and people realize that they should buy homes based on need, not greed.

www.BrettGrendahl.com

Mortgage Rates & The Fed

Just some quick observations this morning as we await news of what the Federal Reserve decides at their scheduled policy meeting today.

Many in the markets are debating whether they will cut their Overnight Rate by 0.25 or even 0.5.

In the days preceeding this event, we saw fixed mortgage rates hit new lows for 2007 and then reverse quickly, moving higher.  I updated many of you and those that were quick to act were able to lock in the lowest rates in over 2 years!  If you want to be on my short list of those to get real-time alerts of these moves, just send me an email at brettg (at) tidalwavecapital.com.

Well, this morning as I fired up my mortgage bond charts for the day I was shocked to see mortgage bonds rallying big time ahead of the Fed's meeting.  This action is shaping up incredibly well.  Depending upon how the market reacts we could see bonds springboard higher, pushing mortgage rates lower, in the days ahead.

However, if they cut by 0.5 we actually might see fixed mortgage rates move higher.  If the markets see the Fed's actions allowing inflationary pressures to run unabated this hurts mortgage rates. 

Going forward, we can easily see rates move lower quickly in the days ahead or it might be until next February or March at the earliest that we revisit the recent several year lows in rates.

For those that have been paying attention in recent weeks, the lesson is:  when you see a great opportunity present itself you need to ACT!

Happy Holidays!

www.BrettGrendahl.com

Mortgage Rates at New Lows

That's right, its time for everyone to dust off their old closing documents and check out the rate on their current mortgage financing.  We've just seen fixed mortgage rates move into the 5's and that is the lowest they've been in over two years.

I've been busy talking with many past clients, reviewing new FIXED RATE options, and locking people into these new opportunities.

Those that are fast and decisive will find themselves with the safety of these lower fixed rate mortgages.  This is not a time to try to be better than the market and "gaming" where you think the market will go.  Heck, I've been at this for over 10 years and I'm not even trying to predict past the next week or two.

When you have lenders going out of business, loan programs changing almost on a daily basis, rates moving up and down off any little news event, and everyone wondering what the next subprime shockwave will hit and who it will hit; you need to act not guess.

Everyone should be doing a quick mortgage review to see if now is the time to act.  Shoot me an email at brettg@tidalwavecapital.com if you want guidance from someone who lives and breathes this stuff everyday.

www.BrettGrendahl.com