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Weekend Market Update

Feb. 27-28, 2010

Mortgage-backed securities and Treasuries regained in the last week of February most of what they lost the third week of February and closed in the trigger-pulling, locking range of low mortgage rates just days after market watchers feared the sky was falling. An ongoing scenario of low inflation and a weak economy continue to keep a lid on rates.

Much fanfare has been given to the Fed’s decision to stop buying mortgages, and the concern is that rates will be compelled to rise to attract sufficient numbers of less benevolent investors. When it became apparent earlier this week that everybody---every expert and analyst---got on the same side of the question, that rates were going up-up-up, I started having second thoughts. When “everybody” is saying the same thing, and is taking the same position, the sport is gone and something is wrong. The markets tend to confound the most possible people—even so-called experts—at the worst time.

The market’s action gave a second chance to borrowers and refinancers who thought they had missed the boat with rates rising swiftly last week. All of that said, I still believe the line of least resistance is for rates to go up. And, I think the “experts” are probably right that rates will increase this year, although modestly.

The 10-year Treasury closed at a yield of 3.6%.

Contact me to lock in a refinance rate or get pre-approved for a purchase and snag a piece of this historically favorable time for buying real estate and obtaining financing.

Stocks ended February with a gain of 2.6% in Dow terms, closing at 10,325. Investors welcomed a report from the Commerce Department saying that GDP grew at a 5.9% annual rate in 2009's fourth period, the fastest rate since the third quarter of 2003.

30-Year Conventional Fixed

4.75% $100,000-$417,000


FHA-100% VA

5% $100,000-$393,300


100% Guaranteed Rural Housing w/no MI

5.5% $100,000-$417,000

30-Year Jumbo Fixed

6% $417,001-$900,000

(Interest-only available-Call me)

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

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

"If you board the wrong train, it is no use running along the corridor in the other direction." - Dietrich Bonhoeffer

Visit my real estate website:

http://www.RealCarte.com

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination, subject to program and lock period. Market Update informs on market trends and is not a quote for a unique borrower.)

Weekend Market Update

Feb. 20-21, 2010

Red Alert on Rates

Note: Red alert on rates is posted for Realtors, builders and consumers at what we believe are critical market turning points.

Mortgage rates appear fully engaged in a trend higher, having risen about 120 basis points since the lows of 2010 were hit on Feb. 5. That roughly translates to an increase in a 30-year fixed rate of .25%-.375%. We have been in a “5 per cent market,” meaning 30-year fixed rates have been around 5%, more or less. It would not be surprising to find ourselves in a 6 per cent market before long.

After another day of rising rates on Friday and after some of the bad news got flushed out, the market for mortgage backed securities and the often-correlated 10-year Treasury actually closed higher for the day, meaning pressure on rates eased. For most of this week, my phone was buzzing with texted updates of market changes alerting that rates were rising at a gallop.

The move up in rates---and down in price for mortgage-backed securities---was accelerated when Federal Reserve Chairman Ben Bernanke reiterated last week (as reported in our Feb. 13-14 Weekend Market Update) that the Fed would cease buying mortgages in March. That was not unexpected as the Fed had been signaling that for some time. The macro move to the current leg of historically low rates was kicked off in November 2008 when the Fed announced they would step in and buy mortgages.

Unplugging Life Support

Certain market watchers had predicted that the Fed would extend life support to the markets, but now it is clear the Fed’s policy is to slowly withdraw some of the props it had put under the housing market. The Fed also this week announced it was increasing its discount rate, which it charges banks, from .5% to .75%. This is not the Fed funds rate and does not affect prime.

Without Fed buying of loans, rates may have to rise in mortgaged-backeds to lure investors who want a certain return for the risk of buying mortgages. There will be days of backing and filling, and the market will not shoot straight in one direction. There are counter forces still at work to keep rates low---high unemployment, a still weak economy and no sign of inflation. When stocks have bad days, it is still likely that money will move into these securities to keep rates in check. However, it appears the trend---or line of least resistance---is now for mortgage-backeds and Treasuries to drop in price and to increase in rate and yield.

(Rates move opposite the price of the related instrument. For instance, the 10-year Treasury had a range of 50 basis points on Friday, selling off for most of the day and touching the 4% yield range before buying prevailed in late afternoon, and it closed in yield at 3.78%. So, if you were watching CNBC on Friday, they were telling you Treasuries are down/weak and selling off as they have been all week, and then that Treasuries rallied to finish up/strong for the day. The translation for rates, therefore, was higher rates/yields when Treasuries were weak and selling off, and rates/yields got lower as buyers for mortgage-backeds and Treasuries prevailed in late afternoon trading.)

Stock market averages gained for the week as investors took the Fed’s backing off of market stimuli as a sign that the Fed believes the economy has improved and is becoming more able to stand on its own two feet.

Why Buy Now?

April 30 is the last day to have a contract in hand in order to take advantage of the first-time homebuyer credit of up to $8,000 and the move-up buyer credit of $6,500. April 15 is another date to mark on the calendar and not just because income taxes are due---it is the last day FHA case numbers will have the current level of up-front mortgage insurance. The MIP is going from 1.75% to 2.25% after that date.

Remember that I work for a direct lender, a mortgage banker that underwrites and funds its own loans. That keeps the buying process more efficient and better insures your timely closing.

Rising rates ahead also present another reason to buy real estate at this time.

30-Year Conventional Fixed

4.875% $100,000-$417,000


FHA-100% VA

5.25% $100,000-$393,300


100% Guaranteed Rural Housing w/no MI

5.5% $100,000-$417,000

30-Year Jumbo Fixed Rate

6.25% $417,001-$900,000

(Interest-only available-Call me)

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

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

"The time is always right to do what is right." --Martin Luther King Jr.

Visit my real estate website:

http://www.REALCarte.com


Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination, subject to program and lock period. Market Update informs on market trends and is not a quote for a unique borrower. Reply)

Weekend Market Update

Feb. 13-14, 2010

Mortgage rates came off their 2010 lows this week as weak demand for $40 billion in three-year Treasury notes and general firming in stocks for the week were cited as driving forces.

Federal Reserve Chairman Ben Bernanke said the Fed would quit purchasing mortgage-backed securities at the end of March, which was expected. Many economists are forecasting higher interest rates being the theme for the balance of the year.

Stocks broke their three-week losing streak, but not before plunging below 10,000 Dow points on Friday and cutting losses to pop back over the psychological 10k mark by the close. All major averages were down the for day except Nasdaq.

Recent mortgage loan data reinforces what we are experiencing locally, which is that there is a surge in home buying at this time, but refinances are coming in at a trickle.

April 30 is the last day to have a contract in hand in order to take advantage of the first-time homebuyer credit of up to $8,000 and the move-up buyer credit of $6,500. April 15 is another date to mark on the calendar and not just because income taxes are due---it is the last day FHA case numbers will have the current level of up-front mortgage insurance. The MIP is going from 1.75% to 2.25% after that date.

We are implementing the new RESPA changes with very little trouble, although there is some level of learning curve that we should get past shortly. The good news for Realtors is that you have no part of this and need not know anything about the gory details---just work closely with a strong mortgage banker to take care of you and your buyers.

30-Year Conventional Fixed

4.875% $100,000-$417,000


FHA-100% VA

5% $100,000-$393,300


100% Guaranteed Rural Housing w/no MI

5.5% $100,000-$417,000

30-Year Jumbo Fixed Rate

6% $417,001-$900,000

(Interest-only available-Call me)

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

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

“Most people have never learned that one of the main aims in life is to enjoy it.” ---Samuel Butler

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination, subject to program and lock period. Market Update informs on market trends and is not a quote for a unique borrower.)

Weekend Market Update

Feb. 6-7, 2010

The battered U.S. stock market recovered from a sharp drop in late trading Friday but still posted its fourth straight weekly drop.

The Dow Jones industrials, down nearly 170 points in afternoon trading, clawed their way back to finish with a gain of 10. But more stocks fell than rose on the New York Stock Exchange as investors contended with another series of troubling signals about the global economy.

Investors worry that the debt problems will hinder efforts to sustain the nascent economic recovery and undermine confidence in the stability of governments that stand behind the euro, which has been dropping against the U.S. dollar.

With the Dow briefly dipping back below 10,000 and the benchmark S&P 500 down 7.3% from its 15-month closing peak of Jan. 19, money managers and analysts say there is a growing sense that the U.S. stock market's rally from the lows of March 2009 has all but run its course.

Market Technicals

Market technicians are watching for stocks to break through downside support, which, in the case of the Dow could be considered to be the 10,000 mark. With stocks selling hard on Thursday---down more than 250 Dow points---in the face of good earnings news on some fronts, that presented another technical signal of a down market ahead. Strong market moves that seem to contradict “news” are usually reliable signals of what is ahead.

Bad news for stocks is often good news for Treasuries and mortgage-backed securities, and lenders repriced to the good on Friday. The 10-year Treasury closed at a yield of 3.55%.

FHA Deadline Coming Up

Closer to where the rubber meets the road in the local real estate market, if there has ever been a time to buy or refinance a home, it seems to be now. FHA is the main game for purchases now, and FHA’s upfront mortgage insurance will jump to 2.25% come April 15. Also, the first-time homebuyer incentive of $8,000 and the move-up buyer incentive of $6,500 are good through April 30. Call me for details or to pre-approve a buyer for the program.

Economists expect interest rates to rise later this year as the weight of debt and China’s projected slowing of U.S. debt purchasing compels higher rates for Treasury issues to be successful.

30-Year Conventional Fixed

4.75% $100,000-$417,000


FHA-100% VA

5% $100,000-$393,300


100% Guaranteed Rural Housing w/no MI

5.5% $100,000-$417,000

30-Year Jumbo Fixed Rate

6% $417,001-$900,000

(Interest-only available--Call me)

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

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

“Prosperity is the best protector of principle.” --Mark Twain

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination, subject to program and lock period. Market Update informs on market trends and is not a quote for a unique borrower.)