THE FED DELIVERS - we get another significant rate drop

Hello Everyone,

As of 2:15 yesterday, March 18th, rates are FANTASTIC. We've hit another refi boom and it will benefit buyers and sellers as well. This means 3 things:

1) Rates are low again so if you didn't refi in early January when they got low for a few days, now is the time. Don't get caught trying to time the bottom again. The bottom can disappear fast.

2) Rates are so low right now that it is an even better time to buy AND to sell. Talk to your sellers to about a price reduction, if necessary, to get interest back in their house. What they'll lose from a lower sales price, they'll make up for on the rate for their next loan as long as they take advantage while rates are down. Since rates are so great, get those buyers off the fence.

3) Watch the lenders your buyers are using and be careful of the timing of your future closings. Finding that internet lender promising the lowest rate is always a bad idea but right now it's dangerous. We all know they never deliver on those rates in the end and more importantly, they are going to be so inundated with calls for refinances that their turn times will be outrageous. Focus on lenders you know and trust and work with dates that are realistic. As a lender whose primary focus is purchase activity, the purchase loan always comes first at Prospect. We love refinances, but our business model is built around purchase loans so we make sure our deadlines are met and our loans get closed. So, what happened at 2:15 today? The Fed meeting announcement was made. Everyone figured that they'd keep the Federeal Funds rate in the same 0 - 0.25% range and they did. There was hope that the Fed would extend their buying of MBS (Mortgage Backed Securities). A while back, they committed to buy $500 billion in Mortgage Backed Securities between January and June to help a) drive rates down and b) keep rates down. It drove them down but then they popped back up a little - still very good but not the bottom. We were hoping they'd buy some more MBS and extend how long they'd keep buying. Next, in recent meetings the Fed has said they stood at the ready to buy long term Treasuries IF the need arose. Again, we hoped they might say the need arose and they'd buy Treasuries because if they buy treasuries then that drives the yield down and mortgage backed securities would likely follow that trend, bringing mortgage rates down. Either one of these would have helped the market. WELL, THE FED DELIVERED A DOUBLE WHAMMY. They said they'd buy an additional $750 billion on Mortgage Backed Securities and do it for the rest of the year. That more than doubles their original commitment. But they didn't leave it there. They also decided to commit to purchasing $300 billion in longer term Treasuries over the next 6 months. This double whammy gave the 10 year treasury the largest 1 day decline in yield in over 50 years. Mortgage Backed Securites dropped significantly in yield as well. This is GREAT NEWS for mortgage rates.

Now, how long will it last? No one knows. Just because they'll be buying through the end of the year doesn't mean rates will continue to drop. Following their announcement in January, rates were fantastic for less than 3 days. We have great rates now. They are better than they've been in decades. Take advantage while they're low. Don't get greedy waiting for them to drop another 1/8%.

If you're interested in qualifying for a mortgage you can fill out a simple 2 minute online application @ http://www.DavidProspect.com.

If you would like to see what homes are for sale in the Massachusetts area you can search the MLS by signing up on my website @ http://www.BryceSabol.com Are you interested in Selling? Contact me and I can help you also!

Sincerely,

Bryce Sabol
Sabol Associates Team
Keller Williams Realty North Central

978-413-8684 mobile
978-293-1750 fax

Bryce@kw.com email
Sabolbry AOL IM screen name

http://www.BryceSabol.com
http://www.BryceSabol.net