industry news: Fed Cuts = lower mortgage rates, right?
- 02/19/08 10:40 AM
Is a Fed rate cut really good news for mortgage rates? The facts may be surprising. The Fed can only control the Discount Rate and the Fed Funds Rate. This is very different from mortgage rates. A mortgage rate can be in effect for 30-years while a rate set by the Fed can change from one day to another. On the graph see how the interest rate on the 30-Year Fixed FNMA have been on the rise since the last couple of Fed Rate Cuts. It is often said history repeats itself, right? Today, the mortgage bonds dipped -135bp, which is the biggest dent … (2 comments)
industry news: What's all this?
- 02/15/08 08:29 AM
I usually don't do weekly reports, however as I was getting organized after a busy week, I've noticed some things that I'll like to share. On February 13, the highlight was last month's Retail Sales report with an unexpected +0.3% The surprise was due to the fact that traders were almost counting on a -0.3%. Excluding the automobile sales, we get 0.3% that also turned out to be better than the expected 0.2%. It just makes sense that February could have been a slow month, because as we go through changes in the economy we become more cautious about spending and some times before making additional purchase decisions we … (0 comments)
industry news: The stimulus package is here, now what?
- 02/14/08 10:40 AM
I've read mixed comments about the highly anticipated "rebate." For example, on a January 31, 2008 press release, the Financial Planning Association advice consumers to be carefull how they will spend their rebate checks. One of the strongest observations from the personal finance perspective is that "spending the rebate may not be in the best interest of many Americans. Not setting up a household budget is how many Americans got into financial trouble in the first place." according to Mark Johannessen, CFP®, president of the Financial Planning Association® (FPA®) The FPA made a point if we consider that the national savings rate is minus 1/2 … (4 comments)
industry news: HR 5140 Passed, Now what?
- 01/31/08 07:12 AM
By now, we have all heard the good news of increased lending limits in high cost areas, and tax rebates to help stimulate the economy. On the surface, we all rejoice now that more loans and with less restriction will become available, right? This is what's happening: The US House of Representatives overwhelmingly passed HR 5140 recently - an economic stimulus package that includes a temporary increase in the conforming loan limit and the upper threshold for FHA loan programs to as much as $729,750 in high-cost areas. The temporary increase would last only until the end of 2008. This bill would also restrict Fannie … (4 comments)
industry news: Housing – Deal or No Deal?
- 01/28/08 05:37 AM
The new home sales for December 2007 were reported below expectations. The supply of new unsold homes rose to 9.6 months from November's reading of 9.3 months.
What 2008 will be like if you're looking for a real estate deal? Last year home prices dropped between 5 - 10%, but there was no "bubble". This new year will be another down year for housing with similar declines in prices - but will also mark a bottoming out. The thing of it is...you can't see a bottom until you are already past it, much like how we always see refinance activity pick … (1 comments)
industry news: The Federal Reserve Lowers Interest Rates by 0.75%... What Does This Mean For YOU?
- 01/22/08 05:12 AM
Dear reader, The Federal Reserve surprised the market this morning with a 75 basis points rate cut... What Does This Mean For YOU? In order to answer this question, it is helpful to understand the four major interest rates that are affected by the Fed: Discount Rate (currently 4%) - the interest rate that banks pay when they borrow money directly from the Fed. The rate has been largely symbolic in the past because hardly any banks take the Fed up on their offer these days! You see, banks prefer to get short term financing by: Issuing "commercial paper" - these are short term IOUs of … (0 comments)
Is a Fed rate cut really good news for mortgage rates? The facts may be surprising. The Fed can only control the Discount Rate and the Fed Funds Rate. This is very different from mortgage rates. A mortgage rate can be in effect for 30-years while a rate set by the Fed can change from one day to another. On the graph see how the interest rate on the 30-Year Fixed FNMA have been on the rise since the last couple of Fed Rate Cuts. It is often said history repeats itself, right?;)
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