David Zopf

30 Yr Fixed Conforming – 6.375%

15 Yr Fixed Conforming – 6.125%

30 Yr Fixed Jumbo 7.625%

5/1 LIBOR ARM – 6.75% (w/ 1pt)

7/1 LIBOR ARM – 6.5% (w/ 1 pt)

30 Yr FHA – 6% Prime 5%

6 Month Libor – 3.12% Last week

6 Month Libor – 3.25% This week

Some weeks surprise me with how little there is to talk about when it comes to the economy; this is not one of those weeks.

Rates dipped on Monday but have shot up since. Today we are about .375% higher than last week except for FHA which is the best rate out there.

As I am sure you heard; the Fed held the Funds Rate steady so Prime is still at 5%. I am happy with this decision as I believe a strong dollar is the #1 priority for our economy at this point in time.

Also, although we may not be feeling it yet, we will see gas prices drop as oil has finally broken the $100 barrier on its way back down to reality. As I mentioned before, I expect to see gas below $3 here in the near future.

The nation's homebuilders frantically cut production of new homes in August by 6.2% in an effort to eliminate inventory on the market. Building permits plunged to a 26-year low. And believe or not - that's all a good thing for the mortgage industry - longer term. The more builders cut production, the sooner the single-family residential market can begin to recover. The tilting point will occur when the total number of starts falls below the monthly new home sales pace for at least three months. We are not there yet, but the new home starts number is certainly headed in the right direction.

If you have a minute, please the articles below. They are actually quite insightful and I was impressed to find them.

Links:

http://money.cnn.com/2008/09/17/news/economy/housing/index.htm?postversion=2008091715

http://money.cnn.com/2008/09/17/news/economy/colvin_recession.fortune/index.htm?postversion=2008091713

30 Yr Fixed Conforming – 6%

15 Yr Fixed Conforming – 5.625%

30 Yr Fixed Jumbo 6.375%

5/1 LIBOR ARM – 6.375% (w/ 1pt)

7/1 LIBOR ARM – 5.875% (w/ 1 pt)

30 Yr FHA – 6%

Prime 5%

6 Month Libor – 3.12% Last week

6 Month Libor – 3.11% This week

Fannie and Freddie’s takeover by the government has calmed many fears in the minds of investors which funneled more funds into the bond market. This didn’t do much for jumbo products, as Fannie and Freddie don’t play in that game, but it lowered conforming loans a good bit. Even with a little rebound yesterday, we are about .375% lower this week on the 30 year than we were last week.

How long will the rates stay lower and will they get even better? Only time will tell. The government is not as efficient at running programs like the private sector (although Fannie and Freddie have been run terribly as a quasi private entity). My fear is low rates will be subsidized by taxpayer money for any spread between the jumbo rate and the conforming rate. I say this as the private sector runs the jumbo rate market so that is a basis I compare to.

Is it a good thing that F&F were taken over? From a global economic standpoint, yes. It provides stability for everyone. Is it going to ease the credit crunch? No. It is a move to eliminate the possibility of F&F going under.

Links:

http://money.cnn.com/2008/09/04/news/economy/workforce.ap/index.htm?postversion=2008090409

30 Yr Fixed Conforming – 6.375%

15 Yr Fixed Conforming – 5.875%

30 Yr Fixed Jumbo 6.5%

5/1 LIBOR ARM – 6% (w/ 1pt)

7/1 LIBOR ARM – 6.25% (w/ 1 pt)

30 Yr FHA – 6.375%

Decent week for rates as they all dropped between .125% and .25%.

As much as the media belly-aches about our economy, it is actually moving along at a nice clip and, although painful in some sectors. This is especially true when compared to the rest of the world. If you don’t believe me, consider this. The first thing we talk about in Econ 101 is “Opportunity Costs”. That new car is awesome but there was an opportunity cost of many thousands of dollars to get it. Just because you had to spend your money doesn’t mean you made a bad choice (as long as you can afford it). The same is true in every aspect of our economy. The dollar value goes down but that increases our world exports; our economy as a whole is more productive but we need fewer people to do the work. We need to look beyond the cost that the media writes about and weigh the positive behind the story. My articles this week are good examples of that. A keen eye will see through the negative in the headline.

Links:

http://money.cnn.com/2008/09/03/news/exports_commodities.fortune/index.htm?postversion=2008090407

http://money.cnn.com/2008/09/04/news/economy/workforce.ap/index.htm?postversion=2008090409

30 Yr Fixed Conforming – 6.5%

15 Yr Fixed Conforming – 6.125%

30 Yr Fixed Jumbo 6.875%

5/1 LIBOR ARM – 6 % (w/ 1pt)

7/1 LIBOR ARM – 6.375% (w/ 1 pt)

30 Yr FHA – 6.375%

A good week does not equate to an overheated economy BUT……. if you have missed some of the headlines, they are quite good. As you may remember, the total combined output of our national economy is how we measure if we are in a recession. Our goal is to grow output at a continual rate of 2-4%. If the output actually goes into the negative for two quarters in a row, we consider that a “Recession.” Some states may be see local recessions but the country on a whole is what we look at. As of yet, as much as our media would like you to think, WE ARE NOT IN A RECESSION and just got news today that the GDP grew at 3.3% despite this temporary blip in gas prices.

NAR also released numbers showing an increase in home sales.

Like I said, this is not a guarantee that we have hit bottom but I think we have and it will take a couple/few more months before it becomes mainstream news.

We just need to keep our heads above water until everyone else believes what we know and all will be good.

Links:

http://www.msnbc.msn.com/id/26436824/

30 Yr Fixed Conforming – 6.625%

15 Yr Fixed Conforming – 6.125%

30 Yr Fixed Jumbo 8.0%

5/1 LIBOR ARM – 5.875% (w/ 1pt)

7/1 LIBOR ARM – 6.25% (w/ 1 pt)

30 Yr Flex 97 – 6.75%

30 Yr FHA – 6.625%

Rates have been stable for about a month now which has been quite nice. Jumbo 30 years are getting harder to find in the 6’s but besides that, we are in pretty good shape.

To reiterate some past week’s updates, the value of the US dollar is rising as oil continues to come down in price along with all the other commodities, seller funded DPA is pretty much a thing of the past, and the $7500 tax rebate/loan is getting more bad press.

Links:

http://www.cnbc.com/id/26197071