Posts Tagged ‘lehi lender’

Markets: Flat.  No change.  Rates hover at 5% and a bit below.  15-year loans are at 4.25% and thereabouts, 5/1 ARMS are 4% or a shade lower.

Analysis: A piac nem tud melyik iranyba menni, ugyhogy semmisem tortenik.  If I write the same thing I’ve been writing for the past month, it gets old, even for me, so I wrote it in Hungarian this time.  Prizes for the first person to email me the sentence above in English.

There’s nothing going on, people.  Or, at least, nothing that is big enough to make the markets move.  Breathlessly we wait for the Fed to stop buying mortgage-backed securities, and loud are the forecasts of rate-based doom, and yet…nothing.  Still, nothing.

Clarification: There is a lot of confusion about the homebuyer tax credits, so let me herewith set the record straight.  YOU DO NOT HAVE TO CLOSE ON YOUR PURCHASE BY APRIL 30.  The house merely has to be under contract by April 30.  It can then close any time before JUNE 30.  “Under contract” means there is an agreement, signed by both the seller and the buyer, outlining the sale price and the terms of the sale.  As long as you have that in place by April 30, you still qualify for the tax credit, and that is either the first-time homebuyer credit or the long-time homeowner credit, either one.

Cj

Markets: We’re off 12bps, which is a bit less than what we gained yesterday.  Rates hang out right at 5% (fractionally more on some programs, fractionally less on others).  SOmething interesting to note: the 15-year loans are operating at their biggest spread in a decade – the 15 year fixed loan is currently selling at 4.25% and better, depending on your credit and equity position.

Analysis: We talked about this last time (and here as well, in greater depth), there just isn’t any good reason to believe that much is going to change here.  I got some push-back on my contention that politics is driving the market at the moment, but I’m sticking to my guns here.  Even if Obama is indifferent to a second term (and I’m not convinced that he is, all protestations to the contrary), the driver on this stuff is Congress, more than the President.  The retirement of Evan Bayh of Indiana is a black, black sail for the Democrats.  Having spent 25 years in the political arena, I’m quite sure that most of the sitting Congressmen want to keep their jobs, and that usually means tossing bread to the plebs as they go to the polls.  That argues against fiscal restraint and higher interest rates.  I’m just saying.

NEXT year, well, that’s a different story.  And please let me emphasize, I’m no prophet.  I’m just telling you what I think, and freely acknowledge that I’m often wrong.  But I’m never slow on the trigger, so right or wrong, you’ll have the benefit of someone watching what’s happening in the markets while you do the real work out there.

Action: The tax credit expires on April 30 if you do not have a home under contract.  Call your Realtor and get cracking.  The FOMC stops buying mortgage-backed securities in 42 days.  That’s going to have SOME impact on rates, and it isn’t likely to be good (although, as argued, I don’t think it will be very big).  Move expeditiously.  That is all.

Cj

Markets: We’re down 12 bps (to explain again, this means that the 4.5% FNMA mortgage-backed bond is down .12 points (whoops, just ticked down to .06, so we’re moving in the right direction)).  As that bond moves, so move interest rates, in the opposite direction.  As the bond moves up, rates move down.  As the bond moves down, rates move up.  This move today is the third straight one in a negative direction, meaning that rates are edging higher.  The move is not strong, but it’s definite.

Analysis: Or is it?  Previous to this, we had three straight green days, or rates moving in a positive direction.  new home sales and existing home sales have been a bit weak as prices begin to rise (and folks, prices ARE beginning to rise, especially in places like LA and Las Vegas, where the crash has been especially severe.  I think that we’re seeing some artificial boost from the tax credit, so Heaven knows how bad the existing  home sales would be without that.  Any weakness in the economy right now means good things for bonds and good things for interest rates.

Everyone is looking for evidence that the Fed mortgage-backed security purchase phase-out (expected the end of March) is going to substantially boost interest rates.  As I’ve written in this space before, I’m not sure that’s going to happen.  Generally, bond traders are able to read the paper, and they know better than we do that the Fed move is coming.  Also generally, when news comes out, markets are really, really fast to price it in.  So why, if bonds are going to get crushed in April without the Fed to prop them up, are bonds not getting at least partially crushed NOW?

I keep looking for signs that the selloff is starting.  Is the last 3 days’ movement a sign of that?  I don’t know.  But I am starting to wonder.  If it continues all week, I’m going to get suspicious.

And, of course, I’ll report those suspicions to you.

Action: If you’re looking for a house or trying to get refinanced, you need to have the throttle wide open and be moving forward rapidly.  Get with your mortgage professional and get something in motion right now.  Do NOT wait on this.  As tight as lenders have been recently, and as much as things have changed with loan programs, assuming you’re going to walk in my office and walk out an hour later with a loan is delusional.

For those hoping to take advantage of the tax credit, I have a full cheat-sheet on how that credit works posted here.  Read carefully.

More as events warrant.

Cj

Markets: Blah blah up just a little blah FED blah blah blah GDP growth blah unemployment numbers blah blah blah.  It’s Groundhog Day (again.  What, it’s not Feb 2 where you are?).  Of COURSE the markets are doing the same thing day after day.

Analysis: Nobody believes the economic reports.  Government data is having essentially no impact on anything.  We’re stuck in a narrow trading range and the betting here is that we will blow out of it to the downside, meaning that rates will increase.  When that will happen is anyone’s guess.  I’m no Punxsutawney Phil.  All I can do is promise that when it does happen, you’ll hear about it here first.

Action: Same recommendation as before.  You have time here, but nobody knows how much.  Use it to get yourself positioned correctly so that you can move when the opportunity presents itself.  If you do not do this, and the market takes of, you WILL NOT BE ABLE TO TAKE ADVANTAGE.  The days of deciding this morning to get a loan and tonight being approved are long, long gone.  In most cases, it takes WEEKS to make sure that you’re positioned properly and that there are no red flags.  PLEASE, I beg you, do not wait to start having a conversation with a true professional about your loan options.  Do it today.

Inspirational note for the holiday: I love the movie Groundhog Day.  I watch it with my family every year.  Every year I get something good out of it, and this year was no exception.  I firmly believe that our lives are much more like Phil Connors’ life than we care to admit, and I’m with Rita – “Sometimes I wish I had forever.  Maybe it’s not such a bad thing, Phil.  It all depends on how you look at it.”  We all have much more time than we think, and if we would use it the way Phil eventually did when he learned to play the piano, just plowing ahead, making mistakes all over the place, and not paying the mistakes the slightest attention, getting better and better by never quitting, we could accomplish almost anything.  ANYTHING.  You can do this.  I know of my own self, having put this plan to the test.  So pick something and give it the Groundhog Day treatment; do it and keep doing it as if you had forever.  You’ll get better and better and your life will be richer for it.

See you tomorrow.  Maybe.

Cj

Markets: We’re trading in a very narrow channel this week, and no news is good enough or bad enough to get us out of it.  Our benchmark 4.5% FNMA 30-year bond is off 3bps, meaning it’s flat for all intents and purposes, exactly as it has been for the past week.  We successfully weathered another $12 billion in bond auctions this week without a blip.  This is remarkable, and ought to be telling smart people something.  More on that below.

Analysis: I want to point everyone at a really interesting article from the Wall Street Journal about what’s coming in interest rates on mortgages when the Fed stops buying mortgage-backed securities.  For a long time now, conventional wisdom has held that the only think keeping interest rates this low (5% as of this writing, and a fraction lower in some instances) is the presence of the Fed, doling out huge chunks of money to keep the mortgage market stable.

But look, people, this can’t be right.  Market players aren’t stupid.  They can see the same things everyone else can, and if they really thought that the true market level – minus the Fed – was 6%, we’d be seeing a move in that direction right now.  Instead, what we see is…nothing.  And that’s not because the Fed is buying everything in sight, either.  The markets just don’t believe that there’s going to be a big rate move on April 1.  I don’t believe it, either.

Action: That means that the true market mover right now is the new home purchase market, because the $8000 tax credit for first-time homebuyers and the $6500 credit for long-time owners will expire on schedule.  Houses must be under contract by April 30, and the close deadline is June 30.  If you’re in this market, now is the time to move.  Short sales take an average of 40 days to get completed, which leaves us about a month of extra window in case something goes kablooie.  Which in this market, folks, it does with regularity.

Been saying it for a while.  Do not wait.