Taos Real Estate MORTGAGE MARKET UPDATE: Tuesday 09/16/2008

Posted by Jason Leach on September 17th, 2008 No Comments Printer-Friendly Author's website: Jason Leach

Market Direction:
Rates are: MOVING HIGHER
Rate Volatility: HIGH

Interest Rate Trends:
Long Term (4-6 weeks): FLAT
Short Term (1-2 weeks): FLAT

IT GETS WORSE BEFORE IT GETS BETTER…
The past nine days have been monumental. Last week, the Treasury took control of mortgage giants Fannie Mae and Freddie Mac. This week, investment bank Lehman Brothers filed for the biggest bankruptcy EVER, and Merrill Lynch was saved from the same fate thanks to a quick purchase by Bank of America. Today it looked like AIG, the nation’s largest insurer, and Washington Mutual, the nation’s largest S&L, would quickly follow the same fate due to their inability to raise additional capital after a series of debt rating downgrades.
Stocks tumbled Monday on this news, sending the Dow Jones down 504 points. Money poured into the bond markets… more so treasuries than mortgages, but all the same rates came down. End of day today some of that money went back into stocks as optimism grew that the U.S. may finance a rescue of AIG. I’m betting something will happen this week. This, even in the face of the Federal Reserve’s decision to leave their short-term rate unchanged.
But what does it all mean? Just like I said last week: it gets worse before it gets better. One sign of this: the rates at which banks lend to each other have risen sharply, meaning most financial institutions feel they must hoard their capital rather than risk lending it and potentially losing it. Oppenheimer & Co’s banking analyst says this will cause liquidity in the credit markets to shrink even further - meaning fewer mortgages available to homebuyers. This creates a recipe for declining home prices beyond what has been expected up to this date (remember my past explanation of feedback loops).
What banks have the highest exposure right now? Bank of America, Wachovia and Wells Fargo. They may be next…
Mortgage Interest Rates*
Rates as of Tuesday, 16 September, 2008:
Conforming APR Payment per
$1,000		 Jumbo APR Payment per
$1,000
30-Year Fixed 5.875 % 5.986% $5.92 7.5% 7.602% $6.99
15-Year Fixed 5.500 % 5.684% $8.17 7.125% 7.286% $9.06
3/1 ARM 5.375 % 5.482% $5.60 6.75% 6.847% $6.49
Land: 5-Year Fixed 6% 6.112% $6.00 6% 6.093% $6.00
*Rates are subject to change due to market fluctuations and borrower’s eligibility.
Members of: Better Business Bureau, National Association of Mortgage Brokers, and New Mexico Mortgage Brokers Association.Jason Leach
Mortgage Consultant
Taos Lending Team
Phone: 575.751.4641
Mobile: 575.741.0814
jason@taoslendingteam.com
www.taoslendingteam.com
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