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FNMA 4.0% : showing ZERO change from yesterday. Rates to hold steady at the 5.25% range…ridiculously low.

See the text below from a letter I wrote to a friend today. He is locked at 4.5% but still not wanting to "pull the trigger" because he feels that rates will magically come down lower…and HE IS NOT ALONE or wrong to feel that way. (After all, no one really can see the future.) Do you have any clients or friends like this by any chance!? (Note here: He IS moving forward as of about 30 seconds ago.)

Feel free to use the points below to help with your own "fence sitters"…and good luck!

Hey buddy, I have got to pull the plug on this on Monday. The appraisal is still on hold so we are not out anything but the credit report and cancellation fees at this point.

Rate popped up to 5.25% TODAY...

Remember: Barack Obama really can't do anything about the mortgage rates since they come from purchasing habits of investors. Investors can not buy mortgage backed securities lower than 4%...they are not available. 4% mortgage backed securities usually support 4.5% mortgage notes.

With true hope for the economy...investors tend to move money into the stock market and away from the more conservative investments like mortgage backed securities. This always brings rates up.

This is separate from the reasons cited for the rate spike right now such as inflation fears, hedge fund and foreign investor divestment of bonds and mortgage backed securities, renewed foreign worries over our economic stability and over supply of bonds flooding the market as we attempt to raise funds for the huge undertakings in rescuing our economy.

Seems kind of circular I know and reminds me of the old cliché: danged if you do...danged if you don't. Hope: Higher rates...No hope: higher rates.

The government purchase program (which is responsible through its "rumor" as well as its actions since January 5th for the low rates) seems to be focusing resources now on the 5.0 - 5.5% mortgage bonds which back 5.5 - 6% mortgages. It appears as though the goal now is to provide a ceiling of "support" for interest rates vs. driving them downward.

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DOW: YIKES…down 148 points.

DJIA 8,000.86 -148.15 NASDAQ 1,476.42 -31.42 SP500 825.88 -19.26

GOLDEN…WOW: Gold was trading today at 927.00 dollars an ounce as investors are seeking a safe haven for their money. Other commodities are on the rise as well. Emerging markets such as Eastern Europe that were once thought to be a viable alternative place to sock money are looking less attractive than ever. There is a clear threat to the stability of their currency and governments vs. the euro and the dollar. Investors are trying to figure out where to turn and it will be interesting to see what kind of "combinations" or "unions" may be formed in the name of "stability" and "consolidation of resources." Hopefully the turmoil will be minimized.

GDP-U: Stinky…GDP came in at a "contraction" of 3.8% vs. expectations of a "contraction" of 5.5% this morning. HOWEVER: the number is actually inflated because the report counts goods produced…even if they are not being purchased. SO: when inventory has been stacking up…and lining the shelves it is still counted as part of the "growth" number. GDP measures the value of goods AND services produced in the United States. It is an interesting beast…to learn more <CLICK HERE>. The GDP reported this morning was actually closer to a "contraction" of 5.2% when we remove the "stagnant" goods factor referenced above.

Have a great weekend,

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Chad Schauers

Have you metChad?
MetLife Home Loans
406.522.0922
406.522.0924 (fax)
1924 W. Stevens, Ste. 202
Bozeman, MT 59718

Cell: 406 799 8613
ccschauers@metlifehomeloans.com