Good Morning,
We have seen quite a bit of volatility over the past week. The passing of the bailout bill seemed a bit too late for Wall Street on Monday as the stock market dropped significantly again. This drop ended up benefitting mortgage backed securities and lowering fixed interest rates. As of this morning they are still remaining low but news of the latest Rate Cut of .5% made by the Federal Bank today to correspond with rate cuts by central banks worldwide to help stem damage of this economic crisis has left the market exceptionally volatile once again. These rates could change in the next couple minutes or in a few hours. We are expecting them to rise today based on the market reaction to the Federal Banks rate cut.
Here’s a good article on what this economic crisis means for you. I believe it to be a very good sign that there is worldwide coordination to keep the economic damage to a minimum. No one can tell us what will happen going forward but having a contingent of the finest economic minds on the globe is not something to take lightly.
Have a great week.
30 Year Fixed: 5.875
15 Year Fixed: 5.625
Matthew Royer Mortgage Planner Homes Mortgage ofc 651 770 0637
Good Afternoon, As you may have been aware of, there appears to be an economic crisis going on. There also happens to be a government proposal for a bailout that is being voted on. On Monday, when it was made apparent that the initial bailout proposal was voted out, we saw a massive drop in the stock market (777 points to be exact, and what I believe is the largest single day loss in history). In the more recent past, when the stock market drops that drastically, investors tend to buy mortgage backed securities and government bonds. When this occurs to such a dramatic effect, rates tend to lower quickly. On Monday, the government bonds were purchased in a normal fashion but the mortgage bonds were not purchased in the typical pattern, leaving rates unchanged at the time.
Since then, mortgage backed securities have once again been bought and sold more consistently and as the stock market has recovered slightly, mortgage bonds have suffered, raising interest rates.
The new bailout is expected to be passed this evening but some economists have noted a plan B to help the economy if this does not pass.
With the unprecedented nature of this economic conundrum, it is difficult to say what a bailout passing or a bailout failing will do to the general public. I personally think that there is no way to know which direction is correct. The nations leading economists disagree on which course of action is needed, making it anyone’s guess. All we can do is hope that the decisions being made now will be for the best. Have a great week.
30 Year Fixed: 6.375
15 Year Fixed: 6.125
Matthew Royer
Mortgage Planner
Homes Mortgage
ofc 651 770 0637 cell 612 232 7646 fax 651 766 5201 toll free 888 481 0009 www.MattRoyer.net
Good Morning,
In the continuance of this volatile market, we saw a brief lowering of rates late afternoon yesterday as Warren Buffett made a sizable investment in Goldman Sachs. Those market gains were reversed this morning as the conversation between the federal bank and the government in regards to a potential $700 Billion bailout for the financial industry has been going back and forth the entire week. There will be several statements released today from both sides of the table in regards to this and as it affects confidence in the market, it will also shift what direction interest rates take. It really is anyone’s guess at this point.
Have a great week.
30 Year Fixed: 6.125
15 Year Fixed: 5.875
5 Year ARM: 6.75
30 year Interest Only: 6.75
Matthew Royer Mortgage Planner Homes Mortgage ofc 651 770 0637 cell 612 232 7646 fax 651 766 5201 toll free 888 481 0009 www.MattRoyer.net
Over the past few weeks, rates have been acting like a yo-yo after between one bailout to the next bankruptcy. Rates dropped sharply last week when the Government decided to bail out Fannie Mae and Freddie Mac. This past Friday, we saw rates spike upward almost reducing all gains that we had seen earlier in the week due mainly to investors getting skittish on rising bond prices. On Monday the announcement of Lehman Brothers Bankruptcy and the Federal decision to not help them out led rates back down to the levels we had seen the previous week. This trend was reversed yesterday when Ben Bernanke announced that the Federal Bank would not lower the key interest rate (http://money.cnn.com/2008/09/16/news/economy/fed_decision/index.htm). The entire market was expecting a minimum rate decrease of .25% and up to .75% in some circles. Many investors decided that mortgage backed securities were not where the smart money for investing should go and brought rates to their current levels.
Of course, today being Wednesday, it would seem odd in a week of major market shifting news that nothing else happened. That’s where AIG came into play by accepting a 2 year, $85 Billion loan in the form of a short term government bailout (http://money.cnn.com/2008/09/16/news/companies/aig_questions/index.htm?postversion=2008091622). Essentially, this will give them time to sell enough of their assets to cover the loan and pay back the Federal Bank. Based on the previous news, this may lead many to expect rates to take another sharp drop today. If only finance was that simple. It would make my life a lot easier. Unfortunately, rates are unmoved based off this latest development. One theory on this lack of investment shift this morning is a temporary paralysis from information overload. So many major market changes in a short two week span have led many to re-evaluate their investing plans going forward.
In a market this volatile, I suggest looking over the numbers before hand and running scenarios to see where and when a re-finance will make sense for your individual situation. That way, if rates drop quickly again, you will have the knowledge of when to take advantage of locking in before it is too late. In such an unpredictable environment, the decision time frame can last a few days or as short as 30 minutes.
I am always willing to run scenarios at no charge to help anyone come to a decision in the event another rate drop comes.
Have a great week.
30 Year Fixed: 6.00
15 Year Fixed: 5.875
Matt
Matthew Royer
Mortgage Planner
Homes Mortgage
ofc 651 770 0637
www.mattroyer.net
Good morning,
Lately the name of the game has been oil (http://money.cnn.com/2008/09/03/markets/markets_newyork/index.htm?postversion=2008090310) .
I find it funny that one thing can affect the entire economy so dramatically from week to week. As you will see below, rates took a massive drop this week. There are no major economic reports being released so trading has been made based off of speculation and it appears that the stock market was expecting Gustav to cause more damage to the oil industry than it did. Fortunately for the people who are living in the wake of yet another hurricane, this one seemed to cause much less turmoil than previous storms.
This exceptional dip in rates is a great time for anyone still in an ARM loan to lock into a long term loan and avoid the uncertainty of rate changes. This is a great time to send a little reminder out to any former clients, business partners as well as friends and family to give them a heads up. A quick and easy way to touch base with them and see how life is going for them again.
Here are today’s rates*:
30 Year Fixed: 5.875
15 Year Fixed: 5.500
5 Year ARM: 5.500
-Matt
*rates are based off of an assumed loan size of $200k with a 700 credit score or higher and an LTV of 80% or less.
Mortgage Planner of 10 years, specifying in ensuring that home buyers both understand and enjoy the mortgage process, not worrying about last minute changes and closings not happening.
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