Mortgage rates have improved over the last 2 weeks. Current research indicates that the Federal Reserve will be working hard to push rates lower as they still have enormous supplies of treasury bonds to sell over the next few months. Foreign countries and pension funds don't want to buy treasury bonds, only to see bond prices lose value within days. Dropping bond prices and rising rates discourage everyone from buying bonds, if they believe the bonds will immediately lose value.
The Fed will work behind the scenes to promote lower rates.
I expect lower stock prices in the next few weeks which will help create a flight to safety. Those planning to purchase homes or refinance should be prepared to lock in rates soon. Mortgage rates have been very volatile, often changing several times within the same day. I advise clients to review their current mortgage needs now while rates remain historically low and determine what rate will meet their needs. I then track the rates and notify each person when their target rate is available.
I anticipate rates and stocks to whipsaw frequently in the months ahead. Eventually, more weakness in stocks should occur by September. This time period should be favorable to bonds and supportive of lower rates. Anyone with adjustable rate mortgages must carefully consider refinancing now while they can lock in low rates.
Sunday, June 28, 2009
Sunday, June 14, 2009
INTEREST RATES AT A PIVOTAL LEVEL
On Friday, the ten year yield reached 4% before turning back below that level. When the ten and thirty year rates hit key levels, everyone takes notice. While a ten year rate of 4% may not be historically high, the rate of increase has been sharp and rapid.
Is it reflation? Is it a sign of recovery? Is it inflation? Is this good or bad for the economy or for me as an agent or a consumer?
The rate of change has been excessively rapid, reflecting an increase in the money supply and a return of speculation back into the stock market and inflation hedges. Just 3 months from the collapse of the stock market, investors have fled from the bond market and are ready, once again, to speculate with "hot money". When the bond market sees selling pressure, rates rise and the cost of borrowing rises for consumers and businesses. Recovery in the real world will require TIME to pay off or lose excessive debt and LOW RATES to enable that recovery.
I fully expect to see bonds rally and rates drop as the Fed attempts to lower costs of borrowing. He is dedicated to stimulating the housing market and the economy by providing low rates and liquidity. Once this rally is done, I am looking for rates to skyrocket for a much longer period.
I see a window of opportunity for low rates to peak during the next stock market downturn.
Eventually, all of the stimulus programs will create incredible inflation. This week one of my customers wondered if they should refinance, take out as much equity as possible, and take their equity now. Although the extra funds provide cash for future needs, I advise against this alternative,unless you have special needs.
AT THE PRESENT TIME, I ADVISE MY CUSTOMERS TO REFINANCE MORTGAGE DEBT AT THE LOWEST POSSIBLE LEVEL AND KEEP THEIR FUTURE DEBT SERVICE LOW. THIS IMPROVES MONTHLY CASH FLOW WHICH CAN BE USED TO PAY BILLS AND ADD TO SAVINGS.
I am always available to agents and customers to review individual situations and make recommendations for future mortgage needs. I track rates and notify customers when their target rates have been reached. No one should allow the next opportunity to refinance pass without action, especially anyone with adjustable rate mortgages.
Is it reflation? Is it a sign of recovery? Is it inflation? Is this good or bad for the economy or for me as an agent or a consumer?
The rate of change has been excessively rapid, reflecting an increase in the money supply and a return of speculation back into the stock market and inflation hedges. Just 3 months from the collapse of the stock market, investors have fled from the bond market and are ready, once again, to speculate with "hot money". When the bond market sees selling pressure, rates rise and the cost of borrowing rises for consumers and businesses. Recovery in the real world will require TIME to pay off or lose excessive debt and LOW RATES to enable that recovery.
I fully expect to see bonds rally and rates drop as the Fed attempts to lower costs of borrowing. He is dedicated to stimulating the housing market and the economy by providing low rates and liquidity. Once this rally is done, I am looking for rates to skyrocket for a much longer period.
I see a window of opportunity for low rates to peak during the next stock market downturn.
Eventually, all of the stimulus programs will create incredible inflation. This week one of my customers wondered if they should refinance, take out as much equity as possible, and take their equity now. Although the extra funds provide cash for future needs, I advise against this alternative,unless you have special needs.
AT THE PRESENT TIME, I ADVISE MY CUSTOMERS TO REFINANCE MORTGAGE DEBT AT THE LOWEST POSSIBLE LEVEL AND KEEP THEIR FUTURE DEBT SERVICE LOW. THIS IMPROVES MONTHLY CASH FLOW WHICH CAN BE USED TO PAY BILLS AND ADD TO SAVINGS.
I am always available to agents and customers to review individual situations and make recommendations for future mortgage needs. I track rates and notify customers when their target rates have been reached. No one should allow the next opportunity to refinance pass without action, especially anyone with adjustable rate mortgages.
FIDELITY BANK MORTGAGE
Effective June 15th, I am joining Fidelity Bank Mortgage in Atlanta, Georgia. Fidelity has the pricing power of a bank combined with the efficiences of local processing and underwriting. I will be able to deliver superior customer service with terrific turnaround times, as well as the best available rates and products.
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