FNMA 4.0% bond is holding steady and quoted currently at $102.38 which is near record levels. We are up 9 basis points on the day but were up over 25 basis points at times during this session.
Rates continue to be low... Sometimes this feels like a "Captain's log". You know: "Stardate xyz...rates still low, etc. FHA 30 year fixed is STILL at the bottom of the chart. The bottom of the chart is 4.25%-ish. (The "ish" is because I can not quote specific rates here...you would have to call me for that.)
Rumor #1: I have switched jobs. This is not true. YES I am still at ML. I can't say the company name here because this letter is archived at www.chadcan.com andwww.bozemanmortgageblog.com and I can not mention my company name...hence the "Montana Mortgage Lender" title at the bottom.
Rumor #2: Feds will open another Mortgage Backed Security Purchase program.Remember when the feds purchased $1.25 TRILLION dollars worth of mortgage backed securities over 2009 and the first quarter of 2010? They were a MAJOR investor in the securities and greatly increased the "DEMAND" which when versed against supply: created an increase in coupon values and then LOW Mortgage interest rates. Yes, that is the one.
The truth to this one as I can tell: there is much talk of actually simply RE-INVESTING the return from coupons owned already by the feds as they come due. This is actually a good thing since the feds exiting the market would naturally leave a huge hole. Continuing to make mortgage backed security purchases a part of a long-term plan will eliminate any reimbursement to the taxpayers who indirectly pay for the mortgage backed securities, will maintain our liability with the current nearly 1 trillion dollars invested, will KEEP THAT MONEY OFF THE STREETS so to speak which controls inflation with all the fed dollars injected in the economy among other projected effects. It is all rather interesting and I am hoping this one comes with a long-term exit strategy. Of course, if the feds maintain their position, it puts the tax payer on the hook with any future problems.
Rumor #3: There is some MAGICAL government refinance programs coming that will allow ANYONE with a govie loan to refinance regardless of equity position, income or otherwise. HARP has not gotten the traction or respect that was projected. It looks almost like a "college try" and has taken some criticism. A sweeping program that allowed all govie loans to refi at lower rates could be disastrous though. The cost alone would be immense. Other features though: It would simply transfer risk from the current lenders and bond holders to new ones. The problem though: who wants to purchase the new bonds? With such loose guidelines there is no telling what kind of credit a person would be buying into. The bonds would be a total crap shoot and the only purchaser would have to be the feds...are you smelling that these two rumors may go together? With a lack of enthused purchasers of these bonds: government rates could go up a few percentage points or the program would have to be offered at a few percentage points higher than current rates...which really wouldn't help as many people. The thought was good: save people money monthly on their current government (FHA or VA) loan...and they will spend it in our economy. When the rubber meets the road on this one though, it may not be too good for us.
Cheers,
Chad
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Chad Schauers
Montana Mortgage Lender, Bozeman, Montana
Personal Cell: 406 799 8613
Personal Email: metchad@gmail.com
