News You Can Use from Gary Moore

U.S. stocks were up on Friday after good earnings reports from Google and Citigroup, but major indexes closed down for the week. Mortgage interest rates were somewhere between unchanged and slightly lower for the week.

Fed Chairman Ben Bernanke told Congress in mid-week that the Fed was open to QE3---a third round of quantitative easing moves---to support the economy with buying of mortgages or Treasuries or whatever instruments the Fed deems worthy of large cash infusions.

With interest rates at rock bottom levels as is, there is not much room for improvement there. When the Fed is a buyer, however, the result is to keep rates down.

It is the large banksters (such as Citigroup which reported big quarterly profits Friday) who are racking up from the present state of affairs. Don't be surprised! While regular Americans who are retired or who otherwise wish to preserve cash are unable to get 1% on a safe, liquid investment, the banks have virtual arbitrage by borrowing from the Fed at between .125% and .25%.

The banks then lend at prime (3.25%) or above (the rate floats so that banks pass interest-rate risk to customers) or they buy Treasuries of various durations which yield rates above .25%. The 10-year Treasury was yielding 2.9% at Friday's close, for instance. At one time the Fed had a deal with the banks that the Fed would buy back any notes the banks wanted to dump, which made the "investment" in Treasuries a sure thing.

The banks still enjoy a practical sure thing as if any of them got in trouble they know the Fed would bail them out. That's a deal that we poor slobs don't rate!

By the way, what the banks do with those obscene profits does not contribute to the general welfare of the country that is making the windfalls possible---they use the money to solidify the wealth and power of themselves and their top executives by buying back stock and dishing out bonuses.

Speaking of us poor slobs, the University of Michigan consumer sentiment index fell to 63.8 last month, which was the lowest reading since March 2009.

Nine European banks failed to pass a recent International Monetary Fund "stress test," which continues to keep U.S. markets nervous.

While the news is full of political posturing over a debt level, which itself is a technical rather than policy matter, the U.S. will not default on its obligations to holders of U.S. Treasuries. Moody's will not downgrade U.S. debt. The outcome of the current discussion is already priced into the market, and the markets for stocks and bonds have not been moving strongly or selling sharply.

As much as it is human nature to want a direct and instant explanation for everything, including any market move---like the media thinks it must and like I usually do here since I am following media reports---the markets predict many events before they happen. Serious changes in direction and magnitude occur ahead of the "news" which then explains events in hindsight.

Since the markets have not been particularly phased by the politics, it seems a safe bet is that no disasters are in store. The banks and the bond market are more in charge of us than we realize---even more than Wal-Mart.

As more and more foreclosures come to market, if you are looking at a Fannie Mae-owned property, you likely can obtain a HomePath mortgage with only 3% down and with no mortgage insurance and no appraisal required. An investor can obtain a HomePath mortgage with only 10% down and no mortgage insurance or appraisal required.

We are a HomePath lender, so call me to get your buyers pre-approved as the underwriting for these loans is different from others.

Gary Moore 615-579-8658, email Gary@BrentwoodHomeLoan.com. Web site: www.BrentwoodHomeLoan.com

30-Year Conventional Fixed

4.75% $100,000-$417,000


15-Year Conventional Fixed

3.875% $100,000-$417,000


30-Year FHA-100% VA

4.5% $100,000-$393,300


30-Year Jumbo Fixed

4.95% $417,001-$1,500,000

(Interest-only available-Call me)

Rural Development 100%

5.25%

THDA Great Start 100% with Gift

5.35% $100,000-$393,300

4% of loan amount Gift

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

Mortgage Planner, First Community Mortgage

...a subsidiary of First Community Bank

Cell: 615-579-8658 Toll-free fax: 866-321-6513

Quote of the Day

"The value of a man should be seen in what he gives and not in what he is able to receive." - Albert Einstein

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http://www.BrentwoodHomeLoan.com

Market Update informs consumers and Realtors on market trends, offers subjective opinions, does not express APR and is not a quote for a unique borrower.