L Dean Davidson

Fence sitters may be dealing with an opportunity lost by trying to time the market in hopes of a "better deal". The following demonstrates that which we have been saying for months.

As the pressure for higher mortgage rates has increased in recent weeks, investors have speculated that the Fed would step in to "defend" certain interest rate levels, but that hasn't happened. This week, Fed officials explained that their mortgage-backed securities (MBS) purchases are designed to support the mortgage market and not to set rates. The Fed's MBS purchases of $25.5 billion this week were similar to levels seen in recent weeks. Disappointed that the Fed hasn't increased its quantity of asset purchases, investors sold MBS this week, and mortgage rates moved higher.

A number of factors have been developing which typically push interest rates higher. The coming supply of debt needed to pay for government programs will compete for investor funds. Despite strong demand for this week's large Treasury auctions, investors are concerned that higher rates will be required in the future. In addition, an improved economic outlook has made investors more willing to move funds to riskier assets and away from safer assets such as bonds. It also means that higher inflation may be a concern sooner than previously expected.

Info courtesy of Jeff Cook, Bradford Mortgage Company.

This afternoon investors decided the selloff of MBS was overdone and favorable re-pricing took place.

Rates are still EXCELLENT!

Here's a sample of Primary Home Purchase money rates today, up to 0+1, with escrows for a borrower with median credit of 720-760. These are subject to vary based on loan amount, occupancy, LTV, credit quality and other factors.

Conforming (using 250K as amt)

30 yr fixed 4.875%

15 yr fixed 4.5%

5/1 ARM, 30 yr am 4.00%

Jumbo (using 650K as amt)

30 yr fixed 6.00%

15 yr fixed 5.00%

5/1 ARM, 30yr am 4.375%

Super Jumbo (using 1M amt)

30 yr fixed 6.125%

15 yr fixed 5.00%

5/1 ARM, 30 yr am 4.375%

Complements of Ashleigh Sumlin, Bradford Mortgage Company, 704-307-9908

We are closing in on almost 4 months since the benefits of the Stimulus Package for home buyers was announced. Unfortunately, the incentives have not yet spurned an appreciable amount of buying activity, though some markets have reported some modest upswings in the past 3 months.

So, why haven't the results been more dramatic. To begin with, the stimulus package didn't reach deep enough into the population to benefit all buyers at all levels of the economic scale. Anyone that is not a classified "first time buyer" does not get the $8,000. Federal tax credit that is promised the first time buyer. They are also the ones who can afford in many cases to wait and try to time the market, hoping for a better deal. They are not likely to be that smart, and will not benefit by waiting near as much as they would by buying now, and do their share to restimulate the economy.

The first time buyer, on the other hand, is the one most likely to be timid about making their investment in a new home during a period of uncertainty, and when jobs are being lost everyday. They are influenced by watching their family members and neighbors come home with their pink slips, and scared they may be next. Understandable, and totally a part of our human nature.

Both of these groups of potential home buyers could do a lot very quickly to jump start the economy, the stock market, and the general feeling of well-being across the land by doing what they already want to do. They could stop the bleeding in the employment numbers, reducing the risk of losing their own jobs, open the home building businesses, and all those that support it with the products they sell, and send a clear and message to the world that it is the consumer that leads out of recessions, not governments.

The only thing that the government can do, is provide the atmosphere for that buying activity, and it has fallen sadly short of creating that incentive. Spending on it's favorite programs is not the answer, and I believe the economic indicators, after 4-5 months now, has told us just that. The question still remains, will the public take the bull by the horns, or wait for mother Govco to solve it's problem?

TARP funds must be finally in play now- check out our LOW Jumbo and Super Jumbo 30 yr fixed rates!

Here's a sample of Primary Home Purchase money rates today, up to 0+1, with escrows for a borrower with median credit of 720-760. These are subject to vary based on loan amount, occupancy, LTV, credit quality and other factors.

Conforming (using 250K as amt)

30 yr fixed 4.75%

15 yr fixed 4.375%

5/1 ARM, 30 yr am 4.125%

Jumbo (using 650K as amt)

30 yr fixed 5.875%

15 yr fixed 5.25%

5/1 ARM, 30yr am 4.875%

Super Jumbo (using 1M amt)

30 yr fixed 5.875%

15 yr fixed 5.25%

5/1 ARM, 30 yr am 4.75%

Compliments of Asleigh Sumlin, Bradford Mortgage Company, Charlotte 704-307-9908

It's been longer than I like between posts, but I have been watching with interest the effects decisions in Washington are having on our futures, and what is being done or promised with our money. Some of the measures I advocated last August in the wake of Fannie Mae and Freddie Mac failing, are finally being done. Maybe not as far reaching as it could to get the real estate market turned around, but enough to benefit a lot of home buyers and, consequentially, sellers.

The American Recovery and Reinvestment Act of 2009 is providing tax credits for home buyers that have not owned a home as a primary residence for 3 years, otherwise referred to as first time buyers. This is not a permanent program, but offers a generous short term window of opportunity to take advantage of three things that enhance their purchase decision. 1) They get the tax credit 2) They take advantage of very low interest rates, and 3) They can still capitalize on some very handsome seller incentives either on new homes or resales. There is no reason to delay. Any speculation that prices will fall further can result in an offsetting rise in interest rates, as inflation is sure to be a bi-product of all the other spending.

For sellers who have been waiting for the market to turn to put their homes on the market, this is a good time to be in the market. Buyers are going to take advantage of the new incentives, and your home needs to be in the product mix for these buyers to consider, especially if you have a desire to move up or away from your present home.

Check with your lender, or competent real estate broker about your best opportunity to cash in on this brief window of assistance. It won't last forever, and you will want to be able to say, "I'm glad I did," instead of, "I wish I had."

January 31, 2009

Friends in Real Estate,

Mortgage rates continue to stay low due to the government purchase of mortgage backed bonds.

Expect slow underwriting due to the huge numbers of refinances. Plan on 45-60 day closings and be happily surprised if your lender can close sooner. If your contract is on a short sale, closing 4-6 months is not uncommon because banks are swamped with short sale requests.

Appraisals are getting even closer scrutiny. This week I had one with 5 excellent comps, all within the 6-12 month sale requirement. The underwriter requested a 6^th comp sold within the last 3 months. Underwriters are paying very close attention to the CURRENT market, not so much to what happened 6-12 months ago.

Here's a sample of Primary Home Purchase money rates today, up to 0+1, with escrows for a borrower with median credit of 720-760. These are subject to vary based on loan amount, occupancy, LTV, credit quality and other factors.

Conforming (using 250K as amt)

30 yr fixed 5.00%

15 yr fixed 4.75%

5/1 ARM, 30 yr am 4.625%

Jumbo (using 650K as amt)

30 yr fixed 6.875%

15 yr fixed 5.25%

5/1 ARM, 30yr am 4.75%

Super Jumbo (using 1M amt)

30 yr fixed 7.125%

15 yr fixed 5.25%

5/1 ARM, 30 yr am 4.875%

Compliments of Ashleigh Sumlin, Bradford Mortgage Company, 704-373-2289