Marc's Mortgage Matter's

A few years ago my 80-something year old Mom talked herself out of a speeding ticket by telling the young officer that she had “to get there before she forgot where she was going”. Where does the market think rates are going? The futures market is pricing in a 78% chance that the Fed keeps rates somewhere between 0% and .25% through mid-March. So although overnight rates between banks have a very limited correlation with 30-yr mortgage rates, the odds of mortgage rates going sky-high between now and then are small.

But what the heck – why are bonds and stocks both doing well? Didn’t we just learn that the unemployment rate jumped to 10.2% and reached the highest level since 1983? The rate reflects the fact that the number of people unemployed is increasing, and unemployed people are notorious about not being able to pay their mortgage, and having their “consumer confidence” be low. And when confidence is low, those flat screen TV’s don’t fly off the shelves. If the economy is about to rebound, as the stock market thinks, then why is the Fed expected to keep low rates for an extended period of time? Many believe that the outlook for growth, or at least a strong recovery, is grim: there is just too much weakness underlying the economy for the Fed to move to higher rates as inflation is not a worry at the moment. So place your money wisely, since something has to give.

A tax credit update! Although most provisions are the same, apparently there is a facet of the recent extension that is retroactive to November 6. Please check out this site, as the start date for the $6,500 credit is November 6th.                http://www.federalhousingtaxcredit.com/faq2.php

From Freddie Mac (Should go industry-wide i.e. Fannie Mae etc.) : Today, we are announcing that our base conforming loan limits will be maintained at their current 2009 levels for 2010, with the maximum loan limit for a 1-unit single-family property remaining at $417,000. The temporary high-cost loan limits for properties located in designated high-cost areas will remain unchanged for 2010 as well...the loan limits in designated high-cost areas are the higher of the temporary limits established by the Economic Stimulus Act of 2008 (maximum of $729,750 for 1-unit single-family properties in the contiguous United States) and the permanent limits established by the Housing and Economic Recovery Act of 2008 (maximum of $625,500 for 1-unit single-family properties in the contiguous United States)."

Botton Line: November 15, 2009 -- Mortgage rates eased back a little bit this week. Although the price of money is quite attractive, the availability of it remains difficult for many borrowers.   For many wannabe mortgage borrowers, the structure of the market today could be likened to that of a group of penniless children staring in the candy-store window: You can look, but you can't buy.

The fact that credit conditions remain daunting comes as little surprise, as the risks of making loans to the consumer continue to remain at elevated levels. Those hoping to see some reprieve found little encouragement in the latest Senior Loan Officer Opinion Survey, released this week by the Fed and covering the third quarter of 2009. Even as financial markets are slowly healing, "About 35 percent of banks, on net, reported in the latest survey that they had tightened standards on prime residential real estate loans over the past three months," according to the survey. That's actually an increase from the 17% who reported tightening in the period ending in July.

For next week, rates probably don't move much but do seem to have a slight downward trend to them at the moment. We were a little surprised that they slipped back this week, but that may continue next week.


A man staggered into a hospital with a concussion, multiple bruises, two black eyes, and a five iron wrapped tightly around his throat.
Naturally the doctor asked him, "What happened to you?"
"Well, I was having a quiet round of golf with my wife, when, at a difficult hole, we both sliced our balls into a cow pasture. We went to look for them and while I was looking around I noticed one of the cows had something white at its rear end. I walked over, lifted its tail, and sure enough, there was a golf ball with my wife's monogram on it - stuck right in the middle of the cow's rump."
“Ah,” said the doctor, “then what?”
“Still holding the cow's tail up, I yelled to my wife, 'Hey, this looks like yours!'"
"I don't remember much after that ..."