Dear Reader,

I just got out of my hot tub and figured now that I have relaxed a bit, why not blog about "Judgement Day" or otherwise known as May 7, 2007.  Today the interest rates went up significantly and effectively.  Was this a positive effect or a negative effect?  In most cases, it was a negative effect.  I want to blog about who gets effected and how they get effected with some examples.  I started out my day by going in the heated pool and once I was out drying off before I went to the office I realized on CNBC that the 10 year yield was on fire even though it was pre-market.  I got a little tingly feeling inside of me and wondered what was going on.  I tuned in even closer to the television set and realized that the announcers really had no answers either.  I proceeded to get ready for work and I left for work.  As soon as I got to work I turned on my television set in my office and noticed the 10 year yield which the interest rates are closely tied to were rising even more!  At 11:00am, we received notice that the rates went up for the day and it really bummed out a lot of our sales staff in our office.  We received a mid-day rate change for the worse again after 1:30pm.  The rates went up and up and up today!  The faces on the loan officers in the office were in major shock.  The announcers said that the rates would rise even more in the coming days.  The 30 year fixed rate mortgage rates reached the 6.75-6.875% levels which I haven't seen in months. 

Who does this rise in interest rates effect?  If you ask me, let me just give you one answer first and that is EVERYONE!  The whole country, the whole real estate industry and anything closely tied to it.

 1.) Rising inventory of homes listed for sale: Rise in interest rates will cause even more homes to stay actively listed for sale.  The interest rates rising will make it even more difficult for some to purchase homes which will adversely effect the current inventory levels of homes for sale in most markets.

 2.) Rate cuts by the Fed: After watching and reading as much as I could today on CNBC or even on Yahoo finance, I learned that the chances of the Feds cutting the prime rate dwindled down to almost zero.  They will most likely not decrease the prime rate across the board for the whole country which will effect all homeowners nationwide.

 3.) Decrease in home sales will even grow larger: The rates going up will make it even more difficult to sell homes.  Some that were just barely getting qualified will now be rejected for a mortgage.  The lender guidelines tightening up and the interest rates rising will make it extremely harder for borrowers to get approved for the mortgage that they would have been approved for 4-5 months ago.

 4.) Commission cuts and more closign costs: If you were a loan officer/mortgage broker who had an existing active purchase or refinance loan where you didn't lock in your borrowers interest rate, well you could kiss most of your commission goodbye.  There are some lenders who will actually pass along the whole cost of the mortgage to the borrower instead of absorbing it himself.  Most lenders will probably split the rise in cost of the mortgage.  I saw a lot of the guys/gals in my office today with sad faces and frusterated faces.  Luckily, I keep up to date with the market and I am on top of my game and I already had locked in my loans for this month and even my loans for next month.  For example, I locked in one of my purchases for next month yesterday before the so-called judgement day for 60 days because I always try to protect my clients from possible disasters that can happen in this business.

 5.) Decrease in Refinance transactions countrywide:  The last 3 weeks in a row, the interest rates have risen and it will effect most refinance transactions that are current and ones that were going to happen.  If you were taking your sweet time to refinance and you didn't pull the trigger and call your loan officer, then you're out of luck.  The interest rates have been steadily rising and it doesn't look like they are coming back down anytime soon.  I had 2 walk-ins today at the office who inquired about refinancing.  Both of the borrowers had interest rates in the 6.75% range which is similar to what the rates are right now.  I was very honest and up-front with them and advised them about how to refinance if they must but at the same time I told them that it doesn't make financially sense to refinance now.  They were very happy with my refinance consulting and thanked me.  I handed my business card to them and asked them to refer me to anyone that is in the market to refinance or even purchase a home.  I also gave them an extra card to keep for their own.  I told them that they can call on me whenever they need any real estate financial services.  About 3 weeks ago, the 30 year fixed rate conforming mortgage rates were about 6 to 6.125% or even 6.25% range but now they are in the 6.75% to 6.875% range.  As you can see, the rates have gone up significantly and it is going to show in the number of refinance applications across the country.  Hopefully some of the borrowers who have very high interest rates will still have an opportunity to refinance but that pool of borrowers dwindled down even more today.

I can keep going on and on about what Judgement Day meant to the industry and everyone involved with the real estate industry but I think it's enough for now.  Do you agree with what I wrote in this blog?  Comment on this blog and tell me what you felt today as a realtor, as a loan officer and as a borrower.  Were you glued to the internet or CNBC and wondering what was going on? 

Thanks for taking the time to read my blog and hope to see you back here soon.

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Your Connecticut Mortgage Professional,

Nima Rezvan

Home Loan Consultant

203.913.6016

http://www.mynima.com/

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As a home mortgage professional here in Fairfield County, Connecticut, I work closely with all potential borrowers in Fairfield County, Connecticut and all 50 states.  I closely work with the following buyers in Greenwich, CT, Stamford, CT, New Canaan, CT, Darien, CT, Norwalk, CT, Westport, CT, Southport, CT, Fairfield, CT, Bridgeport, CT, Stratford, CT and Milford, CT.