FIVE DAYS LEFT! That includes today, to get a firm, legal contract in place and qualify for the credit (assuming you can close that deal by June 30th.) Contract must me in place by April 30th, this Friday.
“Pigs get fat and hogs get slaughtered!” That’s what a property-investor client told me this week, describing the age-old saying in the investment community. He was counting his lucky stars as we closed 3 loans, refinancing his investment properties into 30-year fixed loans, each with a 4 on front of the rate. He was pointing out that this time we were the hogs and got lucky, getting fat rather than slaughtered. That saying is applicable on two fronts this week: 1) Tax Credit shoppers and 2) Interest Rate Bottom Seekers.
Tax Credit shoppers who waited to the last minute hoping to “hog” the best deal on the planet will have to get lucky to get that contract in place by Friday and deal closed by Wednesday June 30th. Mind you, it can certainly be done. But if they are dealing with bank controlled short-sales, good luck. A full write-up on the ins and outs of the tax credit is available is available in the email version of this newsletter in “The Mortgage Market View”. Please feel free to share this with clients who are getting in under the wire.
Interest rate bottom seekers: We are still in fabulous interest rates right now, but if you are trying to hit the bottom, you may have just missed. This week will tell. (See next paragraph.) Still we have some time near the bottom here to take advantage of great rates. Today’s rate for conventional, conforming, owner-occupied properties is a 30-year fixed rate of 4.875% for the price of an origination and normal closing costs. And 3.5% down, FHA rates for the same property are at 4.750% plus the required MI. Not too shabby.
The coming week is a full of housing and economic news making the headlines. The bigger impact on mortgage rates this week will be from the Treasury auctions ($129 BILLION!!!), but the economic news will dominate the headlines. Here are the high points to watch for. Tuesday we’ll see the Case-Schiller home price index and it is likely to show that February 2010 was the first time we had a year-over-year increase in home prices nationally since DECEMBER, 2006! One tick on this scale does not a trend make, however. And while Median Home Selling Prices will be influenced upward by fewer tax-credit-fueled starter home purchases, the overall trend will largely be determined by the effect of INCREASING notices of deficiencies leading to increasing foreclosures and BOP sales.
Wednesday is an important announcement at 11:15 am pdt. The Fed’s Open Market Committee will release their statement on fed funds target rates. Once again they are expected to stay at 0.0 to 0.25%, but the news will be in the dissents (only one last meeting and he didn’t like continuing the “extended period” language) and in the language of the expected period of continuing low inflation. For months and months it has been that they expect low interest rates for “an extended period”, interpreted to mean at least 3 more meetings (September 21.) I expect that if the language doesn’t change, there will be at least two dissenting votes this time. This represents high drama in the button-downed economic world.
Friday has the next biggest economic announcement with the GDP numbers for the first quarter. This will dominate headlines over the weekend as it should be the third consecutive quarter of positive results, growth in GDP. Following quarters of 2.2% and 5.6%, the first quarter is expected to come in at over 3% and will probably get the economist board to say this is the sign of an exit from the recession. I don’t think it does mark the exit and it will be interesting to see if the NBER stays with a more common sense “it’s not here yet” or blindly follow the numbers into “it’s behind us.” I am guessing that either way, the cheerleaders in the White House, will set caution to the wind and promote the end of The Great Recession. This would be a political mistake, given the hard times still being felt by over 25% of the population in under-employment and foreclosures on the upswing. Political drama meets economic forecasting…
We’ll keep our eye on the things that drive housing prices and interest rates and keep you posted. Please, let us help you, your friends and clients get the best financial advice when it comes to real estate financing. Make it a great week!
PS – Satu and I celebrated 28 years of wonderful marriage this weekend at lakehousebythedunes.com. I don’t know where I’d be without my loving wife. We heard a song that tells my side of the story (though the Richard Petty earrings and Mtn Dew rollers don’t fit my Satu) that indeed “I Married Up”. You can hear a live version of the Antsy McClain and the Trailer Park Troubadours song by clicking here.
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