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Consumers have the "blahs"; What does financial reform mean to mortgages? - Daily Mortgage Rate Update for July 16th, 2010

By
Mortgage and Lending with Province Mortgage Associates - NMLS #2861

Inflation stays low; bank profits up, but revenues down; Financial reform coming - Daily Mortgage Rate Update for July 16th, 2010

Please visit http://provincemai.com for the full text of today's update.

Mortgage rates are better today after reports have indicated that inflation is very low. The core Consumer Price Index, or CPI, came in at a scant rise of 0.2%, meaning that prices of goods consumers use are holding very stable in the US. Inflation is the archenemy of low interest rates, as investors want their investments to gain value faster than inflation takes it away. Meanwhile, consumer sentiment, according to the University of Michigan, dropped sharply this week, probably due to the less-than-encouraging employment situation.

Banks had higher net income this quarter, but did so on less revenue, principally due to the downturn in stock prices on Wall Street. Banks simply make more money on brokerage than they used to. Remember the good old days when banks made money by taking in deposits and using the money to make loans?

Financial reform is on its way to the President's desk, and will have significant impact on the mortgage industry. As it stands now, subject to interpretation, it may take away some of the options consumers have in chosing a mortgage rate. For example, today, a consumer can select 4.25%, 4.375%, 4.5%, 4.625%, 4.75%, etc. on a 30-year fixed mortgage, depending on the closing costs the consumer wants to pay, and the monthly payment target that needs to be hit. In the future, financial reform may reduce that same consumers options to 4.25% and 4.75%, depending on qualifications and where the mortgage is obtained. Obviously, we have a lot more to learn about this legislation.

For today's mortgage rate lock recommendations, please see my full article on http://provincemai.com.

If you have questions regarding Rhode Island Refinance Rates, or whether or not to lock your loan, please don’t hesitate to contact me by cell at (401) 263-8655, or by commenting on this post. Have a great weekend!

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July 15th, 2010 Update

Dan Hartman is a Senior Mortgage Advisor with Province Mortgage Associates, and serves as an Adjunct Professor of Finance and Economics at Roger Williams University and the University of New Haven. He has been helping homeowners and homebuyers with their mortgage questions for over 10 years.

 

Comments (1)

Edward & Celia Maddox
The Celtic Connection Realty - Queen Creek, AZ
EXPERIENCE & INTEGRITY - WE TAKE THE HIGH ROAD

Dan, thanks for sharing this info on the financial reform.  Good info to pass on.

Jul 16, 2010 05:59 AM