December 5th, 2008 By StaceyFleece

These are certainly very dynamic and fast moving times in the mortgage market these days!  Just when you think things are settling down a bit, another curve ball comes our way.  The most recent one came to us courtesy of Secretary Treasurer Hank Paulson yet again.

As you know, the Treasury has already announced a plan to buy mortgage backed securities (MBS) issued by Fannie Mae and Freddie Mac.  Yesterday, they came out and said that they would ideally like to step up those purchases in order to drive mortgage rates down to 4.5% for conforming loans.  I would love to see that happen as much as the next person…but there is NO guarantee that rates will actually get there.  A couple of points to consider:

• The Treasury DOES NOT set home mortgage rates…period!  Mortgage rates are based on where mortgage bonds trade in the open market.  There are many economic and other external factors that contribute to the trading of these bonds.  While their aggressive purchase of the securities could help drive rates down, it is not the only factor.
• It is very difficult, if not nearly impossible, for any one entity to set a target interest rate on home mortgages because of the reasons stated above.
• The MBS market is obviously skeptical of the ability for the Treasury to impact rates down to 4.5% as the market reaction to the announcement was quite muted…and, in fact, rates have ticked UP slightly today.

We certainly are not in a typical trading environment for mortgage backed securities as we are still experiencing significant volatility which is causing rates to move rapidly.  If you are buying a home or refinancing and have locked in a rate that you are happy with now, you should grab it while you can.  There is no guarantee that rates will go lower and in waiting for an incremental drop that may never come, rates could move up fast and furiously in this environment as well.

Most mortgages now come with no prepayment penalty so if down the road rates do come down further, you can always refinance again and can even do it with no closing costs…just ask your mortgage professional about that option.

Stacey Fleece is a Mortgage Loan Consultant with Countrywide Home Loans in Mill Valley in Marin County, California.

September 30th, 2008 By StaceyFleece

We’re entering yet another week of turmoil in the financial markets and we’re still trying to work our way out of this mess. In the recent days, we continue to see challenges for financial companies and our economy as a whole including:

• The failure of Washington Mutual (the largest bank failure in our nation’s history) and the subsequent buyout by JP Morgan Chase.
• The buyout of Wachovia by Citibank…note that Wachovia did not fail but rather took the opportunity to sell itself before it came to that.
• The $700 billion bailout package made it out of committee on Sunday and headed to the floor for a vote – only to miss approval by The House of Representatives falling 13 votes shy.

So now what? Well, I don’t know where Washington goes on the financial bailout in their effort to “get battered US credit markets working normally again”. We continue to hear that without this bailout, the credit markets are coming to a grinding halt – with banks unwilling to lend to businesses, individuals and even to each other. I don’t want to comment on the credit crisis from a Wall Street perspective but I do think it is important today for us as consumers to understand what is happening from a Main Street perspective. So here it is…and let me make this very clear…

Here in Marin, we are still lending on real estate and closing on mortgage loans daily! The media would have you believe otherwise and I can certainly only speak from the perspective of Countrywide/Bank of America (where I work) but it is pretty much business as usual…only with AMAZING rates due to the chaos that continues to swirl around the equity markets.

Last week, Countrywide got very aggressive on jumbo 30-year fixed (yes…jumbo….like loans more than $729,750) as we are pricing below all major competitors right now. We have not seen rates on jumbo 30-year fixed loans this low since before the credit crisis began back in August 2007. Now is the time to grab these – for a purchase or a refinance – as you can borrow up to $3mm with rates around 6.375% with no points!

How long will these rates last? No one knows…but I do know that when Congress gets the bailout figured out (and I suppose eventually they will), that should provide a level of comfort to the equity markets. The potential fallout from that is a shift of funds in the market from mortgage bonds to stocks which would cause mortgage rates to rise. The advantageous low rates are available to consumers now…get ‘em while they are HOT!

Stacey Fleece is a Mortgage Loan Consultant with Countrywide Home Loans in Mill Valley.