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interest rates: OK, Apparently not Everyone is Getting it? - 08/30/07 09:50 AM
What am I talking about? How mortgage interest rates are driven. I continue to see so-called experts, politicians, etc. stating that a Fed rate cut will help adjustable rate holders. That is not the reality.
What drives mortgage rates are Mortgage Backed Securities (MBS). These are the bonds that are a "package" of home loans that are sold on the secondary market. Just as regular bonds trade, MBS trade on an open market and are subject to market forces, not what the Fed does with their rate. In fact, many times mortgage rates move in the opposite direction as the Feds!
So, reality … (2 comments)
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interest rates: Adjustable or Fixed Rate: Which One Should You Choose? - 07/27/07 03:24 PM
With all of the media reports about how bad ARMs and exotic mortgages are, you would first jump to the conclusion that Fixed Rate Mortgages (FRMs) are clearly the better deal. I am sure you have seen the reports of the subprime woes and how many families have been forced into foreclosure due to these types of loans either resetting or recasting. With all of the bad news out there, how could ARMs possibly be worthwhile?
The answer may surprise you. ARMs and exotic mortgages, including the Option ARMs (you know, the ones that everyone hate now), do have their benefits and … (12 comments)
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interest rates: Mortgage Market Meltdown - Will it be Subprime Only? - 07/11/07 07:16 PM
Not a day goes by that you do not hear about the Subprime Mortgage Market disaster and how many people have lost their homes due to bad loans, dishonest mortgage lenders, etc. But will the effects only be felt in the Subprime Markets? The answer may surprise you.
First, let's talk about the real Subprime Market, you know, the ones with bad credit and riskier loans in general because of it. These are the ones that are typically placed into 2 or 3 year ARMs with associated pre-payment penalties. These clients carry higher interest rates, larger margins, etc. due to their lack … (8 comments)
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interest rates: Realtors, You should be scared right now! - 06/09/07 07:11 AM
Why did I start off with this statement? The recent destruction in the Mortgage Backed Securities market has driven interest rates up significantly recently.
That means one thing. Your buyers cannot qualify for as much of a mortgage as they used to!!!
That's right, if your buyer has not locked a loan (and if they haven't signed a contract yet, guess what) they are more than likely not "pre-approved" anymore. That means you need to rethink your list of homes that you should be taking your client to this weekend.
The fact of the matter is that interest rates have risen as much … (7 comments)
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interest rates: Has Anyone Seen the Bottom of This Pit? - 06/07/07 10:20 AM
You have heard the tales of the Bottomless Pit, and that is what Mortgage Backed Securities have found. They continue to freefall with no support sighted in the near future.
Ok, since May 8th, we have seen Mortgage Bonds begin their fall, trading within a Downward Channel. On May 14th, we advised that the breakthrough of the 200-day Moving Average would mean the Bond MArket would get ugly. Today, we have broken through another major support layer, one that leaves a huge gap before Bonds see support again.
Ugly cannot sum up the current status of the Bond Market. With growing inflationary fears, … (4 comments)
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interest rates: Florida Mortgage Market Update - 06/05/07 10:02 AM
We remain in a LOCKING stance. Mortgage Bonds = -22bp.
What do the "Coriolus Effect" and Bonds have in common? Well, the Coriolus Effect describes the whirlpool action that sucks water down in a circular fashoin and bonds continue to be "sucked down" as they remain in their downward channel.
Ben Bernanke has apparently become all powerful and looked upon as the new E. F. Hutton. When Ben speaks, everyone listens and the markets continue their tumble. The funny thing is that Ben didn't say anything different, only stated the same thing that was mentioned at the last Fed Meeting and released … (0 comments)
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Robert D. Ashby
Miramar,
FL
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