Mortgage and Lending with Pickering Group

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Friday's bond market has opened in positive territory despite the lack of economic data being released. The stock markets are mixed with the Dow down 29 points and the NASDAQ up 13 points. The bond market is currently up 20/32, but we will still see a small increase in this morning's mortgage rates due to noticeable weakness in bonds late yesterday.

The bond markets fell during late trading yesterday after the 30-year Bond auction was met with lackluster demand from investors. This led to afternoon selling in bonds and some mortgage lenders to revise rates higher late yesterday. Just how much of a difference in this morning's rates will be seen depends if your lender revised higher yesterday. Overall, I am expecting to see rates move higher by approximately .125 - .250 of a discount point over yesterday's morning rates.

There is no relevant economic news scheduled for release today. Accordingly, there is nothing to indicate that we could see the bond market give up this morning's gains. Because of this, I am shifting to a float recommendation across the board, at least temporarily. Next week's data is not of much concern to me with only a couple of important reports due out.

The first relevant report of the week doesn't come until Wednesday morning when we will see January's Retail Sales figures. This could mean that today's buying in bonds may carry into early next week. But, look for more details on next week's events in Sunday's weekly preview.  

If I were considering financing/refinancing a home,

 Cautiously Float if my closing was taking place within 7 days, 

 Cautiously Float if my closing was taking place between 8 and 20 days, 

 Cautiously Float if my closing was taking place between 21 and 60 days, 

 Cautiously Float if my closing was taking place over 60 days from now,

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Fannie Mae has announced that in 2008 they will be implementing price overlays for all loan products with FICO's under 680 and LTVs > 70%, as well as loans with subordinate financing and 2 unit properties. These changes could literally pop up on the rate matrix anytime between now and then with no warning, so floating a rate, even if the bond market is down 20 basis points could prove to be very costly. Any borrower on the fence with a FICO 70%

FICO 680+ No adjustment

FICO 660 - 679 -0.750

FICO 640 - 659 -1.25

FICO 620 - 639 -1.75

FICO < 620 -2.00


Comments (2)

Junk Eviction
Your blogs are always informative.  Junk
May 03, 2008 05:23 AM
James Wexler - Scottsdale, AZ

curious if you are still on AR or are using an outside blog primarily ??

Aug 06, 2008 05:13 PM