The Mortgage Manifesto

Mortgage Rates Continue Higher

The trend is for higher mortgage rates.

The dip from a few weeks back was very short-lived, as most dips are this year.

Even if the economy continues to weaken do not expect lower mortgage rates, unless the Federal government decides to included everyday people in their bailout plans. 

www.brettgrendahl.com

Looking Back in History

Back in March of 2007, when the subprime mortgage crisis really unveiled itself (yes, it's been a year and a half now) this is what I wrote:

Read my post from March 2007.

Brett

Say Good-Bye to the Dip in Mortgage Rates

What a run during the past two weeks!

Opportunity appeared, some jumped, some thought they were smarter than the market and waited.

Those that acted just locked in the lowest fixed rates since January.

Those that waited missed the window.

From a technical standpoint, bond prices fell huge from Thursday to Friday with yields jumping higher.

I continue to sound the same drum.  DO NOT EXPECT MUCH LOWER MORTGAGE RATES anytime soon.  The Federal government is too busy helping the big institutions to work on the real reform that helps both you and I.

Brett

Rates Ticking Higher

Much like last January, mortgage rates dipped to new multi-month lows and then bounced higher since then.

They haven't moved back to where they were prior to the Fed takeunder of Fannie & Freddie but they are off their lows.

Congratulations to all who jumped at opportunity and locked in those rates!

Now, we will see them (or lower) anytime soon?

Do you think anyone really can predict ALL that influences mortgage finance right now?  Think again!

With ever-tightening underwriting guidelines, a mass exodus of companies from the mortgage space, and a general distaste for mortgage related assets by big investors, all we can be really sure of is what we know TODAY.

My general advice to all is LOCK anytime you see a rate that works for what you are doing and GET IT CLOSED right away before something changes.

Have a great weekend!  I'm wondering, "who gets bailed out this weekend?"

Brett

Rates Holding

Mortgage rates have been holding fairly stable after stair-stepping lower on Monday, following the historic news of the government taking the reins at Fannie Mae & Freddie Mac.

Will they go lower yet?

I'm sure your wondering and thinking, "the stock market is falling, the economy is weakening, mortgage rates should go lower, right?"

Well, that's how these economic relationship worked in the past.  Make no mistake, our present is RADICALLY different than the past.

Why?

Well, the #1 reason is that investors are scared of buying securities backed by mortgages.  Scared silly.

They wonder, "...will home values crash lower?"

They wonder, "...will the borrower pay me back?"

They wonder, "...can I sell this to someone else if I don't want it anymore?"

Three important questions that move buyers to the sidelines.  Without buyers, rates have to rise to find buyers.

One big caveat is this:  mortgages that are being underwritten starting in the middle of 2008 are being held to much more stringent & sound underwriting requirements.  In addition, conforming mortgages are now explicitly backed by the U.S. government. 

So, why would someone buy a U.S. Treasury note when they can get a mortgage-backed security, backed by the U.S. Treasury, for several points higher in yield?

Unfortunately, that doesn't answer ALL three questions above.

When the answer to those questions turn positively affirmative, then rates can truly normalize and we can get back to a normal business cycle in the forecasting of mortgage rate movements.

Until then, if someone tells you they can predict where mortgage rates will be in 1,3 or 6 months, in my opinion, they are completely unprofessional.

No one knows.  There are just too many pieces at work and too many unknown risks just around the bend.

My advice remains the same it has been all year.  If you see a rate that works for what you want to do, LOCK IT & CLOSE IT while you know you can get it.

www.BrettGrendahl.com

Rates Move Lower Today

Mortgage rates hit some lows not seen since January, well, for fixed conforming rates that is.

30 year fixed at 5.625% with zero points is the lowest on some deals today.

Remember......this market is VOLATILE. 

The last time we had rates dip just a bit lower than today's levels they bounced right back in a few days.

If you want to lock one of these rates in, email me at brettg (at) tidalwavecapital.com.

www.BrettGrendahl.com

U.S. Government Takes Over Fannie Mae & Freddie Mac.

Well, the expected is coming true, most likely over this weekend.

What's that?

Looks like the U.S. Government will place both Fannie and Freddie into a conservatorship.

The common stock of these companies will be basically vaporized.

That's why we were not bottom-seekers in buying their stock lately over in Tidalwave Trader.  I see one very important silver-lining to this historical event.  What is it?  The rebuilding of trust & confidence in the credit markets.

Why?

Fannie Mae and Freddie Mac debt, bought by mutual funds, commercial banks, institutions, municipalities, and foreign governments needs to be repaid.

Lately, there has been a lot of doubt & risk that this money was lost by those who traded their cash for the mortgage-backed securities sold by these companies.

That gigantic doubt seized up the credit markets.

Well, with the U.S. government making their quasi-guarantee completely explicit.....their minding the house now.....faith can return.

Another strategic option that now comes into existence is a rewriting of these securities to allow principal writedowns, a "mark-to-market" that can release you, me, and our fellow citizens from the damp cloth currently draped over the housing markets. 

What do I mean?

With so many people's loans have risen on a loan-to-value ratio while their appraised property value declines slows down activity, be it refinancing or sales & purchases.

Will our leaders have the courage to do what is best?  I hope so.

www.BrettGrendahl.com

Mortgage Rates for Today

The highest unemployment rate since October 2001, 6.1%, kicked off a rally in the bond markets.

This has pushed conforming mortgage rates near their lows for this year.

Here are how some loan programs are pricing with no origination fee:

• 30 year fixed at 6.0%
• 5/1 ARM at 5.875%

• 3/1 ARM at 5.625%

Check in here next week to see if rates move to new lows.

www.BrettGrendahl.com

The Impact of the Jobs Report Becomes Important Again to Rates

For the past year, the impact on mortgage rates from the monthly jobs report has been minimal.

That was weird.

For so many years, the monthly jobs report data really influenced the trend in mortgage rates for that month.

Well, as we get ready for tomorow's report, my take on the buzz and crowd thinking, in addition to mortgage rates having moved to the bottom of the range they've been in for quite some time, impact is likely coming.

Check back tomorrow to get a read on what the impact is and how it might impact you.

www.BrettGrendahl.com

Near the Lowest Mortgage Rates of 2008.

As the stock market nose dives we are seeing rates on conforming fixed-rate mortgages (is there really anything else these days?) move near their lows of the year.

For example, the rate on the benchmarck 30-year fixed rate mortgage with zero origination fees showed up at 6.0% today.

For the majority of this year that rate has moved from 6.0% to around 6.5%.

Let's see if we can get some momentum moving lower. 

www.BrettGrendahl.com