Friday's jobs report puts Texas mortgage rates in free-fall
Not since the first quarter of this year have we seen rates dip below 6%. Well, it happen on Friday and continues today. Mortgage rates were in a free-fall on Friday after news of an outright decline in August payrolls and downward revisions of the June and July employment reports. This was the first reduction since August 2003 and put a further fear of economic recession into Wall Street.
How much will the Federal Reserve cut interest rates?
This news drove the Dow Jones industrial average down 250 points (or 1.9%), while the NASDAQ followed suit with a similar decline. The combination of this negative economic news, declining consumer confidence, a weak housing market and a painful credit crunch (rising mortgage defaults) will put pressure on the Federal Reserve to lower rates on September 18 in an attempt to stimulate the economy. Federal Reserve Chairman Ben Bernanke hinted recently of an interest rate reduction by saying that the Federal Reserve is "ready to do all that is needed" to continue the current 6-year-old economic expansion. The question now on everyone’s lips is no longer whether, but when and by how much, the Federal Reserve will cut interest rates.
The bright spot from all of this is that the consumers will take out new residential mortgage loans
Borrowers who need to purchase a home or refinance an existing mortgage will reap the benefits of the already lower mortgage interest rates. The problem is that qualifying standards have tightened for mortgages and other forms of credit, and those borrowers that will really feel the effects of the "squeeze" will be all of those who otherwise would find it difficult to re-qualify for loans and whose adjustable-rate mortgages have recently reset or will reset in the near future-- at higher interest rates. Many borrowers who cannot take advantage of refinancing into a mortgage loan with a lower-than-reset rate because of the more restrictive qualifying standards are likely to suffer "payment shock" and could eventually add to the already dire recent home foreclosure statistics besetting both them and their lender institutions.
About Ted Blanchard
Ted Blanchard, a Certified EcoBroker®, is a top Real Estate and Mortgage professional in North Texas. His Company, www.tream.us specializes not only in representing buyers and sellers in real estate transactions, but offers mortgage services as well. TREAM, Inc. is truly a one stop shop for real estate and mortgage services. Ted can be reached at 214-224-0907 or by email at email@example.com