www.metchad.com
Market Insight
Have you metChad?
Market Insight
Have you metChad?
BRIEF MI today...
FNMA 4.5% is down 16 bps today...despite articles suggesting "improving rates" we are still hovering around 5%-ish according to my rate sheet and the national averages posted. The 4% mortgage rate rumor has surfaced again. Remember that mortgage rates are directly linked to mortgage backed security offerings...and the lowest bond coupon offered is a 4% mortgage bond...which "backs" a 4.5%-ish rate. I am assured by more than one "expert" that rates are REALLY not likely to go below 4.5% because of that...but hey: I have been surprised before. Would you invest money and assume the risk of buying "mortgages" for LESS than a 1/2% return? (4% coupon vs. 4.5% mortgage it is backing) Most people with money and market savvy would say that if they want a return that small...they will invest in less risky vessels.
Dow is UP (as predicted) by 236 points but still in the basement. Remember in October of 2007 we were up to an ALL TIME high of close to 15000 points so we are about 1/2 that now...
DJIA 7,350.94 +236.16 NASDAQ 1,441.83 +54.11 SP500 773.14 +29.81
Consumer confidence is at a "41 year low" according the "index" that came out today. Some were comforted by Obama's promise to lead us out of these dark times in his speech today...and others are still searching for specifics. Remember the severe economic downturn in 1920-1921? Neither does anyone else. That is because the market was allowed to "correct itself". Fast forward to the "crash of '29" that was blamed on many things...but was actually prolonged according to many analysts due to government intervention. We saw a similar effect in Japans recent 18 year "slump" that many feel was due to massive government intervention. We are all hoping for the best and according to Fed chairman Ben Bernanke's words today we should start to feel a "turn around" soon. Cross your fingers...and go out to eat tomorrow...or otherwise buy something! :-)
Home prices continue to "decline"...making this an opportune time to look into some great deals.
I read an interesting statement suggesting that the "fees" will likely go UP considerably on conventional loans in an effort to socialize some of the risk there. The concept outlined (and speculated on...ONLY) was that a structure similar to the "funding fee" charged on VA loans would come into play for conventional loans. Remember: since the feds are in "control" of FNMA and FHLMC...they will ultimately be providing backing for what is essentially "government loans"...
HUGE changes coming soon for mortgage insurance coverage on conventional loans. Borrowers will not be able to have more than 41% of their "GROSS" income going out to monthly bills. Other changes include a restriction on mortgage insurance coverage for "cash out" refinances. This would make it impossible to do a conventional loan of over 80% loan-to-value if it were a cash-out refinance or if total debt-ratio exceeds 41%. Stay tuned...more changes to come. This would not have any effect on VA, FHA, RD or a few other loans so we will likely see opportunities with each of those programs in the future. (Myself and many on my team have extensive experience with these loan programs...check with your local professional.)
Check out the article below...part one and two...it may be a little oversimplified: but a GREAT visual way to understand the "financial crisis". It is well worth the time investment (about 10 minutes.)
Credit Crisis Explained part I <click>
Credit Crisis Explained part II <click>
Have a great evening!
FNMA 4.5% is down 16 bps today...despite articles suggesting "improving rates" we are still hovering around 5%-ish according to my rate sheet and the national averages posted. The 4% mortgage rate rumor has surfaced again. Remember that mortgage rates are directly linked to mortgage backed security offerings...and the lowest bond coupon offered is a 4% mortgage bond...which "backs" a 4.5%-ish rate. I am assured by more than one "expert" that rates are REALLY not likely to go below 4.5% because of that...but hey: I have been surprised before. Would you invest money and assume the risk of buying "mortgages" for LESS than a 1/2% return? (4% coupon vs. 4.5% mortgage it is backing) Most people with money and market savvy would say that if they want a return that small...they will invest in less risky vessels.
Dow is UP (as predicted) by 236 points but still in the basement. Remember in October of 2007 we were up to an ALL TIME high of close to 15000 points so we are about 1/2 that now...
DJIA 7,350.94 +236.16 NASDAQ 1,441.83 +54.11 SP500 773.14 +29.81
Consumer confidence is at a "41 year low" according the "index" that came out today. Some were comforted by Obama's promise to lead us out of these dark times in his speech today...and others are still searching for specifics. Remember the severe economic downturn in 1920-1921? Neither does anyone else. That is because the market was allowed to "correct itself". Fast forward to the "crash of '29" that was blamed on many things...but was actually prolonged according to many analysts due to government intervention. We saw a similar effect in Japans recent 18 year "slump" that many feel was due to massive government intervention. We are all hoping for the best and according to Fed chairman Ben Bernanke's words today we should start to feel a "turn around" soon. Cross your fingers...and go out to eat tomorrow...or otherwise buy something! :-)
Home prices continue to "decline"...making this an opportune time to look into some great deals.
I read an interesting statement suggesting that the "fees" will likely go UP considerably on conventional loans in an effort to socialize some of the risk there. The concept outlined (and speculated on...ONLY) was that a structure similar to the "funding fee" charged on VA loans would come into play for conventional loans. Remember: since the feds are in "control" of FNMA and FHLMC...they will ultimately be providing backing for what is essentially "government loans"...
HUGE changes coming soon for mortgage insurance coverage on conventional loans. Borrowers will not be able to have more than 41% of their "GROSS" income going out to monthly bills. Other changes include a restriction on mortgage insurance coverage for "cash out" refinances. This would make it impossible to do a conventional loan of over 80% loan-to-value if it were a cash-out refinance or if total debt-ratio exceeds 41%. Stay tuned...more changes to come. This would not have any effect on VA, FHA, RD or a few other loans so we will likely see opportunities with each of those programs in the future. (Myself and many on my team have extensive experience with these loan programs...check with your local professional.)
Check out the article below...part one and two...it may be a little oversimplified: but a GREAT visual way to understand the "financial crisis". It is well worth the time investment (about 10 minutes.)
Credit Crisis Explained part I <click>
Credit Crisis Explained part II <click>
Have a great evening!
--
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
