Interest Rates Drop

On Tuesday morning the Fed and the Treasury announced that they would be buying $500 billion of mortgage backed securities from Fannie, Freddie, and Ginnie. They also will be buying in February $200 billion of securities that personal loans such as credit cards, car loans, and student loans.

This news caused mortgage rates to drop ¾% in the morning; but, in the afternoon rates went back up ¼%.

If you want to talk about refinancing your home or rental properties please give me a call and I would be honored to help you. But, hurry as rates may rise quickly.

For the first 3 people who call me I will WAIVE our processing fee of $415!!!

Rate Update

Conventional 30 year fixed with 20% down 5.25%

Conventional 30 year fixed with 10% down and NO PMI 6.00%

Conventional 5/1 interest only ARM 5.75%

Conventional Jumbo 5/1 interest only ARM 5.75%

FHA 30 year fixed 5.50%

Today was a short trading day for mortgage bonds and typically those are not good days; but today was a different story. Initially the 5.50% opened down 38 bps; but ended trading up a total of 16 bps or a swing of 54 bps today. The 5.50% bond closed just below its 2008 closing price high for the year. And the 2008 intraday trading high is just 44 bps higher.

Hopefully mortgage bond pricing will have “staying power” at these low rates and then maybe next Friday when the Jobs Report is released, rates may go even lower. But, history this year tells us this won’t happen. Thus, this could be as good as rates get in the short-term and maybe long-term. The lowest rates went to in 2003 was 5% for just a couple hours in June.

THUS NOW IS PROBABLY THE TIME TO REFINANCE!

3rd Quarter RE Report from FHFA

FHFA, the new regulator for Fannie and Freddie, who replaced OFHEO released their 3rd quarter report this week. Here are their results—

·         Nationally the Purchase Only Index dropped 1.8% in the 3rd quarter and prices are down 6% in the last year.

·         Their All Transaction Index (includes refinance appraisals) revealed a price drop of 2.7% in the 3rd quarter and a price drop of 4% in the last year.

·         For Denver’s All Transaction Index our market was number 133 out of 292 markets studied, putting us in the top half in the country.

·         For Denver prices have dropped .95% in the last year and 2.25% in the last quarter.

Builders’ Folly Continues

It was reported this week that new home sales in October dropped 5.3% from September's levels. There was 433,000 sales (annual pace) in October or roughly 36,000 new homes sold last month.

I did not think too much of this number until I reviewed last week's numbers on new home starts and building permits. In October, builders started 791k homes (annual pace) and pulled permits for another 708k homes (annual pace). In monthly numbers, builders started nearly 66k homes and pulled permits for another 59k homes.

Do you see a problem here?

They are still building and planning to build more homes than they are selling right now. Thus, their inventories will continue to grow. They should be starting fewer homes than they are currently selling. Right? Their folly knows no bounds.  

I expect that we will see several Top 20 national home builders go out of business next year, unless the government intervenes to help.

 Loan Update

·         I received word from one of my favorite PMI companies to work with that beginning December 1st that all loans with PMI will be manually underwritten to their rules with NO regard to loan approvals from Fannie or Freddie. And this is from one of the two PMI companies that do NOT have Denver listed as a Declining Market. Thus, my job gets even tougher. This is another reason why a large majority of loans with PMI I am now taking to FHA. Please make sure that your buyers’ lender knows what they are doing.

·         It appears that LPMI loans (Lender Paid Mortgage Insurance) may go away early next year if the loan is sold to Freddie Mac.

·         Beginning January 1, 2009 Freddie Mac now only requires 24 months and not 48 months AFTER the COMPLETION of a Chapter 13 Bk.

To Your Success,

Lonnie Glessner

Mortgage Investment Advisor &

Certified Mortgage Planning Specialist

America's Mortgage Alliance

6534 S. Broadway

Littleton, CO 80121

Office 303-993-2367

Fax 303-993-2358

Cell 303-881-6374

www.3MortgageSecrets.com

Read my BLOG at http://3MortgageSecrets.TheWrittenBlog.com