RateWatch – Pigs in Dirt

Markets: Stock markets hate anything that smacks of uncertainty, so when Mexico had the Apocalypse yesterday – you know, wars, plagues, and earthquakes – stock markets took that as a bad sign and sold off.  Bonds were the beneficiary, and mortgage rates improved ever-so-slightly.  We’re in the 4.75% range on most conventional programs, and FHA rates are threatening that level as well.  This has led to the bad pun that the Swine Flu has mortgage borrowers as happy as pigs in dirt.  Hey, don’t blame me.  I’m just the messenger.

Analysis: There isn’t anything happening that we haven’t discussed before.  Times are uncertain.  It appears that we are hitting bottom in some areas on housing, and that certain sectors of the economy are no longer contracting, though nobody is claiming growth at this point.  Most likely what we’re seeing is the acclimatization of the markets to the idea that the economy is not going to roar ahead, so we’ve gotten used to the smell, so to speak.  I think there will be pickups in the economy as we head into summer.  Summer always makes people feel better.

Meanwhile, there are really great incentives to purchase houses, and those incentives are starting to work their magic, especially in the lower price ranges.  $8000 of government money is nothing to sneeze at.  In Utah mortgages, we’re also seeing the impact of the $6000 Home Run Grant on purchases of new-built homes.  Other states have incentives as well.  There’s a synopsis of these here. So better days, relatively speaking, are ahead.

Tidbit: Look for appraisal fee increases. FNMA and FHA are requiring new, difficult and complicated forms to be filled out for their appraisals, so appraisers are charging more for that.  Additionally, thanks to a lawsuit by the State of New York, as of Friday all appraisals will have to be ordered through third-party administrators, and not directly by loan officers.  This will entail delay, slower mortgage processing times, and, of course, higher fees.  But you feel protected, don’t you?  Very good.

The trend is still good.  Better times are ahead.

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