Let me first say that I'm not a negative person. Rather, I'm probably the most positive person that I know....Therefore what I'm about to say does not reflect an angry bitter person, but someone who has sat back and analyzed this 4.5% 30 year fixed rate that everyone's talking about. Let me say that I'll conclude with some positive advice for all the young bucks in real estate that want to make this a positive. Let's start with some of the facts.
1) Last week there's an announcement that there may be a 4.5% 30 year fixed rate. Here's the deal. We don't know much about it. We know that the target is first time homebuyers and that IF it comes out, we just don't know when, for how long and what the terms are. There are thoughts that the government will buy the rates down to 4.5% for first time homebuyers. We're not sure if that rate will be fixed or a temporary buy down of that rate. There's been a lot of banter about both. If the rate drops to 4.5% on a temporary basis, we may be recreating the whole mortgage default situation again when the temporary buy down expires.
2) The government, in another vein, stated that it may buy up all the mortgage backed securities (MBS's). The purpose of this would be to strengthen MBS's. This has been a favorite investment of hedge funds throughout the world until the whole mortgage crisis. What was once viewed upon as one of the strongest platforms throughout the world has dropped attraction because of the mortgage fallout. The mid east and China have quit buying them. THAT'S A HUGE PROBLEM. So buy having the government buying or backing the MBS's we'd see this become a strong asset. A great biproduct would be that it should drive the 30 year rate down below 5% on it's own merits. In other words, this has nothing to do with the 4.5% rate for first time homebuyers.
Items number 1 and 2 are separate but both being talked about in the same vein. This is huge opportunity, but means that there is so much confusion. So what's the negative about all this? Here you go.
1) We don't know when and if either will happen.
2) We don't know if the 4.5% 30 year fixed rate is permanent or temporary. We do know that it's for first time homebuyers (in its current stage right now).
3) Buyers and refinancers think that the 4.5% is for them. It probably isn't unless they're a first time homebuyer. Further, when will the program be rolled out and what are the terms, and finally....WILL IT EVEN HAPPEN?????
4) People think that this is imminent an therefore may hold off refinancing even though a refinance today would benefit them greatly. They're passing on something good to HOPE for something better. They're basing this decision on facts that they're not aware of.
Soooooooooooo anywho..... What is the positive on something like this? Here you go.
1) Contact your current clients and offer to do a mortgage analysis. If the client refinances, great, but if not, make sure that your inner circle is well prepared the rate may drop sharply and soon. Reconnect with your A+ clients and tell them that it will be a mad house, but as a preferred client they will have first shot at a great refinance. Despite the chaos, they'll be protected. GET YOUR A's IN LINE. No matter what happens, you become the source of information as a trusted advisor. THIS IS HUGE.
2) As I've called my client database to prep them, some of them said why wait....let's take advantage of a good thing. Translation...as you're connecting and informing your database, you'll find opportunity and revenue now.