Rates Continue to Imrpove

Interest rates have continued to improve... and bond analysts are considering the fact that their markets and prospective yields may move even lower. That means offered interest rates could go lower as well. How much lower... we are at RECORD LOWS again, when making history its difficult to predict because historical data is not available, so we follow the trend, and right now the trend is positive.

Despite these low rates mortgage applications remain flat which suggests home buyers are not out in the numbers we need to stabilize the housing market. Are we lining up for a double dip? Are more foreclosures going to be hitting the market? Are home prices going to turn down again? These are all legitimate questions and anyone that immediately brushes them off is not being very realistic.

Buying now is by no means a bad move. Waiting to see where the real estate market settles in the next couple of months is not a bad move. Ignoring the opportunity available to refinance into a lower rate or ignoring the low home prices and rates available for borrowing, knowing your options - these are the people I worry about.


Above is a one year graph of the mortgage backed securities market. This market is producing the lowest consumer rates in history. Anyone not interested in paying less for money they have borrowed... didn't think so.

Back

Good day everyone... I hope all have been busy originating new business in the wake of these low rates. I have been out on personal matter for the last week and why you have not seen posts over the last week or so.

Rest assured I am back and hope all of you did not miss me too much... The market over the last week, I am happy to report has been stable and remained relatively unchanged.

To the left you will find a five day graph illustrating a clear range in which we have been trading. This is why rates have been steady. Interestingly, investors are comfortable at these high points, which suggests our market may improve further bringing rates even lower. I wouldn't bank on this, but it is possible.

Right now the real issue is delivering to investors. Keep in mind these are mortgage notes they are buying into, and if we (lenders and agents) are not originating new business, investors are left without product... no product and well they'll only hang around for so long.

I am not worried about our market.... after all one person sells another buys, but we must continue to move inventory and create demand for investors. New demand is critical, so let's turn it up, and get cracking. There are buyer's everywhere.

Open House Flier

Below you will find this weeks open house flier which you may print out and use to compliment your own marketing material.

Of course if you need preapprovals over the weekend to complete your offers we are available. Have a productive weekend.

104.00 Breakout

Today we broke through the 104.00 price point which has been acting as resistance to our market. This has lead to very good rates moving into the weekend. We will have our open house flier published shortly to compliment your marketing material this weekend at your open houses.

Monday will be a very interesting day, which we are hoping provides additional support to our market moving forward. Assuming we do not sell off it will mean 104.00 is beginning to turn coat, acting as support as opposed to resistance, which has been its authority recently.

Currently purchase loans should consider 45 days, although a 30 day escrow is still achievable if the borrower is prepared with supporting paperwork.

These rates are what we have all been hoping for. Let's make the most of our market while these rates are so low.

Markets Improve

Mortgage rates improved today... underwriting turn times got longer... make sure you plan close of escrow periods accordingly. Although the news is reporting mortgage applications are down, our recent experience has been the opposite, although a great deal of demand has been for people looking to refinance.

Even so, we are seeing activity in regards to purchase loans starting to pick up. One problem we are seeing is the general public is not fully aware of just how low rates are. Point in fact, we can now secure a rate of 3.875% on a conforming 30 year fixed home loan right now with an APR of 4.204%.

That's an awesome deal... currently the media is reporting 30 year mortgages at a rate of 4.57% If people only new what was available wholesale, the fence sitters might become home buyers.

We are happy to issue preapprovals to anyone looking to buy a home, and can have an automated approval in less than an hour of taking a complete application.

Now would be the time to educate your prospects, make sure they understand just how low rates have moved.

A Strong Day of Gains

It was a strong day in the mortgage backed securities market, evidenced by the graph to our right. Curiously however, reprices were slow to come, some not at all from lenders that you would have expected improvement from. If you are currently approved with a lender that did reprice, take a good look at the rate sheet, if you're approved with a lender that didn't reprice, holding off until tomorrow's opening may prove to be the smart play.

We have to play close attention to that treasury yield (yellow) which is rising slowly but surely. This will put pressure on our market should it continue.

Additional considerations include longer underwriting turn times at the most favorable lenders. As a result most are either floating in open market for a longer period of time, or forced to take a 45 day lock to ensure they will not need extensions at the time of closing.

Considering this fact, it would be wise to begin paperwork and submit as soon as possible if you are considering taking advantage of these rates.

Settlement...

Yesterday at close our market settled and the July coupon closed out and we rolled into the August coupon. As expected this brought our market down, which is evidenced by the fall at the close yesterday.

Despite this, pricing this morning is still very favorable, and slightly better than yesterday's close. Even so, we are currently down two ticks in secondary which is not a good sign for future rate sheets. This sell off is due to a stock market rally, which I don't see dissipating today. Best we can hope for today is strong support at our current trading level. This would reinforce current pricing and encourage investors to buy leading to a rally. Wishful thinking, but completely plausible.

We are down off highs... the doomsdayers may see this as an opportunity, and believe me there are still plenty of people out there questioning the overall health of our economy.

A Good Start...

Last week our market struggled, and there was the distinct possibility that the current low rates may not be available in the near future. Today, this fear has been curbed, as treasury yields turn South, and the mortgage backed securities market posts gains. We are now back at historic high levels, with the the 4.5 coupon trading at 103.31. 104.00 (just one tick away) we broke through earlier today, but saw a retraction. This price point is a level of resistance, which we have come across before.

The difference is today we are making a strong run at the 104.00 price, and could break through today. Here's my prediction... should the 10 year treasury yield fall back below 3.000% today, we will see the mortgage backed securities market break through the 104.00 resistance.

In closing, yes our market is back at its highs, but it is going to take a little time for rate sheets to catch up. I do expect better pricing to be published by lenders this afternoon, however... if our market holds at these levels for a day or two pricing will only continue to improve as banks stop hedging against the market.

Open House Flier

Below you will find this weeks open house flier with updated rates. Feel free to use this to compliment your own marketing material at open houses this weekend. Hope all goes well. Should anyone need preapprovals we are of course available.

Danger Sideways

Today's trading is a little unnerving... we make an immediate jump at the open, only to have it bleed out back to zero over the last couple of hours. Meanwhile the treasury yield is sitting above 3.000%, and much like a stubborn child after ice cream, will not be reduced.

It may be a little early to call the close, but I anticipate we will move into this weekend with the treasury yield still above 3.000% and the mortgage backed securities market trading somewhere above 103.20 on the 4.5 coupon. Recent highs for this coupon have been 103.31, and I am optimistically hopeful that we will break this level, when is a anyone's guess.

Right now moving into the weekend, rates are slightly off their lows, but still very attractive. I will be publishing the weekly open house flier shortly that will be available for use in open houses this weekend.

Let's make it a productive weekend. We will be available to provide preapproval letters for anyone that needs them and is looking to make an offer over the weekend. You will find our contact information on our website: Pacific Mortgage Consultants.

The Open House flier will be available in a separate post on this blog shortly.

Sideways... but be Careful

Today ended up one tick. Typically any day we post gains is a day I can end happy. But I must confess today's close has me a little unnerved. The treasury yield has creeped above 3.000% which will pose as serious competition to our market come opening.

Considering the day we did out perform treasuries... but tomorrow is a different day, and we may end up on the short end of the stick. Tomorrow will take its cue from the ten year yield. Should it slide back under 3.000% we will be in a much safer position.

Right now our market is vulnerable to a possible sell off. Then again we could post gains tomorrow, should we see the yield shrink back below 3.000 as mentioned above. In the long run, I do think rates will continue to improve albeit at a slower pace than we have seen. In the short term it is a little harder to predict.

Sideways...

This morning we are trading sideways. That's a fancy way of saying rates are holding right now. This is good news considering rates are currently at their best levels - EVER.

Officially we are down one tick right now in the mortgage backed securities market, which is not a whole lot... and is most likely due to the rising treasury yield which is currently 2.973% yield. As long as we stay under 3.000%, I'm okay with this minor fluctuation.

The long and short of it... I am not reading too much into the weakness we are seeing today. Periodic retreats back are to be expected and a natural occurance in any market.

As far as the stock rally is concerned, I find it unconvincing, low volume and traders hesitant to get short ahead of earnings. I do not think this is a run and expect the stock market to remain below 10,000 and the S & P to continue hovering around 1040.00

My plan is to keep an eye on our market and not react prematurely... should support levels be violated in the bonds market, we will reevaluate long term positions.

New Highs Will Bring Lower Rates...

It's has been a favorable day in the mortgage market. Currently up 10 ticks on the day, we are once again breaking through historic levels. Although current rate sheets have not priced these gains in, we can expect to see slightly better pricing tomorrow based on today's trading. Or, we'll see an updated rate sheet this afternoon.

As long as the 10 year treasury yield stays below 3.000%, mortgage rates will remain at these low levels.

I hope everyone had a wonderful 4th of July. With summer officially underway, a CA tax credit, and the lowest rates ever, there are many incentives for new home buyers. It is time to make this summer a summer worth remembering. We look forward to assisting you with your clients preapprovals.

Have a great day.

Open House Flier

This weeks open house flier. Feel free to use this to compliment your marketing material in any open houses you are hosting this weekend. These rates are current and good through the long weekend.
For preapprovals we will be available, and open throughout the weekend, and on Monday which banks are taking off as holiday. You can find all of our contact information on our website: www.homeloanorg.com

Consolidation...

The sideways trend continues today as our market consolidates moving into the long weekend - banks are closed on Monday. With that said we will be open and ready to draft preapproval letters for those of you that require them.

Check back shortly for this weeks open house flier. All of you can use this flier to compliment your marketing efforts at open houses you are hosting.

All things considered, our market was supported today which was important for rates moving forward. The jobs numbers were not good, shedding 138,000 this month. In addition factory orders were down 1.4%, which is huge. It suggests the future of our economy is more bleak than most media outlets are leading us on to believe. All things considered I think rates are going to stay low moving through the long weekend.

Contact us with any questions, or leave a comment here.

Sideways...

Think tomorrow morning is going to be very interesting for our markets... we posted minor gains today, with very volatile trading habits. All things considered investors want to see the job numbers tomorrow.

This weekend rates are going to be very good. Remember to check in tomorrow for your open house rate sheets.

As for additional news, some of the prime lenders offering the best rates are starting to get a little back logged causing delays on approvals and underwriting turn times. This may lead to extensions... talk about this with your lender now so it doesn't blindside you toward closing.

Sell Off this Morning...

Those of you closing inside 30 days, lock, market is literally the best it has ever been and rate sheets are awesome right now... those outside 30 days, you have a harder question to answer. Those with identified properties, but cannot close inside 30 days, you may want to consider a 45 day lock...

Our market is definitely on the precipice... a word I am sure I spelled wrong, but am using correctly. We could go either way at this point in time, although the smart money would be on slightly higher rates... then again long term rates may slide back down after ticking up.

It's a coin flip right now... check your gut, then make a decision.... whatever it happens to be, don't be mad at yourself if it doesn't pan out. Long as you have strong reasons, a decision made is better than any indecision.

Market Update...

Let me begin by apologizing for missing yesterdays post. If it is any consolation, we had a strong day of trading yesterday resulting in strong gains. Today, although we have not posted any real serious gains, up 2 ticks right now our market is showing support at the current levels it is trading.
This is probably due to the poor economic news overseas, and the downturn in our stock market, along with the 10 year treasury yield falling below 3.000% today.

This last point the treasury yield is our markets primary indicator. If we see the treasury yield rise, we will see our market suffer and interest rates rise. This may happen in the short term, however the long term market projections do look dismal supporting low rates to come.

Open House Flier

Here is out open house flier this week. Rates are very good right now and we are starting to see some resistance so get your clients in contract and locked. Look forward to handling preapprovals over the weekend for all of you. Have a productive showing.

Market Selling...

This chart may not show it (because I printed it before the sell off), but our market is currently selling of and down 5 ticks on the day. Sell offs always bring worse pricing because banks work very hard to protect their profit margin, expect worse pricing this afternoon unless we some type of recovering. Unfortunately this sell off looks like it is going to last at least throughout the day.

It is my opinion that this sell off is primarily due to the rising treasury yield. As you can see in my graph, I have identified a specific range that would pose problems for our market if treasury yields broke through... this is what is happening and why we have seen a losses today.

Follow the arrow if you want to know where our market has gone since this picture.


All things considered, rates are still excellent, and this may turn around tomorrow. Right now, my focus is on treasury yield. With strong support at 3.000% yield, we need something that draws investors to this market dropping the yield below this price point. If this happens, better rates are on the way. If we continue to trade in this range, rates will remain static; should yields rise, watch out rates will rise.

Rates are Awesome...

I know some of you must be thinking, why should I care so much about interest rates, I'm a real estate agent - I sell homes, rates are a secondary thought to what I do.... I got tell ya, those agents out there that have this mentality are missing closing opportunities.

With interest rates as low as they are all of us have a major opportunity and should be using it to attract new business. I know many buyers are a little upset that they missed the tax credit. 8000 dollars is a significant amount of money. Even so there are incentives in today's market that were not around while the tax credit was available, namely these low rates.

If you qualified for the tax credit and got into contract back in April, you interest rate for a 30 year fixed was somewhere above 4.5% unless you decided to pay up front costs to buy down your rate. Today, there may not be a tax credit, but you can secure a rate under 4.5% with no up front costs.

This is a major selling point and arguably a better incentive than the tax credit. On a 417,000 dollar loan the difference between 4.75% and 4.375% is a difference of 93 dollars a month... over 30 years, or 360 payments that equals 33, 480 dollars. But let's be honest most people do not stay or hold onto the same mortgage for the full term. The typical homeowner stays in their home for about seven years or 84 payments... that is a total savings of 7,814 dollars, virtually the same as the missed federal tax credit, which brings me to my next point... the CA State tax credit...

CA has allocated 200,000,000 dollars for tax credits for new home buyers up to 10,000 dollars paid out over the first three years you own the home. This is based on a first come first serve system. Couple this with the low rates and payments now available for home loans, and the incentives for buying a home today are better than they were when the Federal tax credit was still available.
We need to educate potential buyers of this opportunity. Everyone is so focused on what they missed they are not looking at what is still available. I look forward to assisting with any preapprovals you require and am happy to discuss these points in detail with potential clients still reluctant to step into the market. Here is a link that break down the CA tax credit.

Speaking of the market, here's a one year graph demonstrating what I have broken down above. Keep in mind high points on this graph lead to lower rates. Look at where we are right now, and it is clear rates are the best they have been.

Resistance Thwarted

Yesterday we managed to break through the 103.00 point of resistance, and have continued to support yesterdays gains with profit today. This is important if our market is going to offer these low rates moving into the future. Sustainability is the name of the game at this point in time. I am optimistic that this week will prove advantageous for our market this week. Even so, look at where we are. High points like these make for attractive selling points. We could face a sell of leading to higher rates.

If you are happy with rates right now, take the money and run, if you willing to take a little risk however, a lower rate may be only a couple days away. The decision should be up to the client, make sure they are aware of just how low these rates are and the current danger of floating.

Volatility... and Resistance

Hope everyone had a wonderful weekend. This morning, investors have wasted no time in disagreeing with on another, consequently we have seen serious volatility this morning, leading us first down, and now up. Currently even on the day, it is going to be difficult to post additional gains considering the strong resistance we face at the 103.00 price point.


For this reason, if you have clients in escrow closing soon, they need to lock their interest rates. Those moving into escrow should be mindful of where we are in the market and may want to consider a 30 day lock as opposed to their working for the more cost effective 15 or 12 day lock periods. This decision will depend on your clients tolerance to risk exposure.

Considering where our market is trading (current highs of the year, and some of the best pricing ever) I am concerned that this support will crumble under the strong resistance we now face.

Open House Flier

Here is this week's open house flier. At first glance it may appear as though rates are very similar to last week, they have in fact approved, and this improvement is reflected in the APR.

Agent's you may print this flier and use it to compliment your own marketing material.

Let's have a productive weekend out there. Any preapprovals needed this weekend, we are available.

Resistance...

As anticipated we have hit a serious point of resistance at 103.00. It will be interesting to see how our market reacts considering the fact that there seems to be clear support at the current price, that being 102.31... only one tick away from our resistance point of 103.00.

I don't expect serious movement in our market today. Perhaps a tick up or a couple ticks down. Monday will make for a much more interesting day of trading.

Moving into the weekend, the recent gains in our market will lead to excellent rates. Check back here shortly for this weeks open house flier.

A solid day of gains... and INTERESTING Headlines

Today is a day of bullet points... First off, our market improved today up 13 ticks which will lead to better pricing. This is great news considering we were in a downward trend. If these gains hold we may be able to safely say "not any more."

Expect there to be resistance in our market moving forward. It is going to be difficult for rates to move any lower to due current mortgage backed security prices. 103.00 is a strong level of resistance, one we have bounced off of before, and will probably do so again. Currently we closed at 102.31, one tick away from 103... and our market (green) flatlined. You can draw your own conclusions.

Headlines: Fannie and Freddie stock have now been removed from Wall Street and are pink stocks trading under a dollar. WOW...

Headlines: Senate Extends Housing Tax Credit... this is not entirely true, the proposed a bill to vote on an extension - very different. Moreover it would only extend the the credit for those that were in contract as of April 30th of this year, giving them an additional three months to close. Welcome relief to some frantic escrow officers I am sure... that is if it passes. The next couple of days will iron this wrinkled mess out.

Headlines: 500+ loan originators arrested by an FBI sting cracking down on mortgage fraud. This is all I know, but the point is it is real... any of you agents thinking it might be a good idea to back date a contract to take advantage of this possible tax extension think again. I for one don't plan on looking over my shoulder for men in black.

Clearly an interesting day in the market. Tomorrow will be interesting as well considering we are teetering on the our line of resistance.

Important Gains Must Hold - Housing Starts Worse than Expected

Today we are up in coupon about 7 ticks, which means better rates, however as we saw yesterday gains can quickly turn into losses should the market dictate. Today's trading will most likely take the lead of the stock market. The DOW is currently trading around 10,360... down about 45.00 dollars; the S&P is currently 1,110 down about 5 bucks. The reason I bring this to your attention. If there is support for the S&P at 1,110 and the sell of does not continue in the short term markets, we may see a return to these markets (from long term markets) which would lead to a sell off and higher rates. The story is the same for the DOW which is and currently has been hovering around 10,000.

And then of course we have the treasury market, which is showing a lower yield this morning, which is helping our market. The underlying news that appears to be guiding the markets right now is the worse than expected housing starts report from Reuters this morning.

08:30 16Jun10 RTRS-US MAY HOUSING STARTS -10.0 PCT VS APRIL +3.9 PCT (PREV +5.8 PCT)
08:30 16Jun10 RTRS-US MAY HOUSING STARTS 593,000 UNIT RATE (CONSENSUS 650,000) VS APRIL 659,000 (PREV 672,000)
08:30 16Jun10 RTRS-US MAY HOUSING PERMITS -5.9 PCT VS APRIL -10.9 PCT (PREV -10.9 PCT)
08:30 16Jun10 RTRS-US MAY PERMITS 574,000 UNIT RATE (CONSENSUS 630,000) VS APRIL 610,000 (PREV 610,000)
08:30 16Jun10 RTRS-US MAY HOUSING COMPLETIONS -7.4 PCT TO 687,000 UNIT RATE VS APRIL 742,000
08:30 16Jun10 RTRS-US MAY HOUSING STARTS DROP LARGEST SINCE MARCH 2009, RATE LOWEST SINCE DEC 2009
08:30 16Jun10 RTRS-US MAY HOUSING PERMITS RATE LOWEST SINCE MAY 2009
08:30 16Jun10 RTRS-US MAY SINGLE-FAMILY HOUSING STARTS -17.2 PCT, LARGEST DECLINE SINCE JAN 1991
08:30 16Jun10 RTRS-TABLE-U.S. May housing starts fell 10.0 pct

I will let you digest these figures and draw your own conclusion about how this effects our markets moving forward. I will say this is one of the reason the short term markets are selling off today, and why we are seeing gains.

Even so, the gains we have posted today fall in line with the projected green trend line outlined yesterday. See previous post... We really need to break out of this trend and establish a new line of support. I hope that the circled area represents such support, but it is way too early to tell, especially considering how closing this mimics the treasury yield down below.

Comments welcome.

Rates Worsen

If you worked half a day today and had access to market feeds this morning you probably left feeling pretty good about the direction our market was heading. Then, well... then it happened.

Currently down 4 ticks on the day, this unfortunate turn for the worse in our market has lead to worse pricing. Moreover it has encouraged banks to hedge on their rate sheets which leads to worse pricing than the market is actually offering.


Above is a five day snapshot of our market. I have drawn in the arrows all three representing possible trend lines, although I will be the first to admit the red line is highly unlikely. The yellow trend line is possible but less likely at this point in time. The green trend line is what our market seems to be following.

we should be preparing clients for worse pricing, and encouraging those in escrow to lock rates to protect their current market position.

All things considered proceeding with caution and keeping a close eye on rates is the winning formula this week.

Any specific questions we welcome. Leave a comment.

Housing Price Index...

This is encouraging... have a look at this HPI which suggests we are currently experiencing a recovery in real estate. I will let you draw your own conclusions... and will be posting this on a monthly basis as it is released.

Market Down... Low Trading Volume...

This morning the market is down, leading to slightly higher pricing. Currently off 5 ticks on the day, it appears as though these losses are primarily a react to a rise in treasury yields this morning. As the graph demonstrates the mortgage backed securities market is following the guidance of the ten year treasury... if we could invert the treasury graph and stick it right on top of our mortgage backed securities graph, they would be close to one and the same. Clearly this is not coincidence, in fact this is quite common.

If it's any consolation trading volume this morning is incredibly light. My gut tells me it is going to be a low volume day. Hopefully we see investors return to our market tomorrow, take a look at current pricing and begin buying. This is the type of support we could use right now for these low rates.

I anticipate lenders will hedge against the market in lieu of these losses this morning. Unless we see our market recover today, expect banks to price worse tomorrow morning.

Open House Flier...

Here is this weeks updated open house flier. Feel free to use this to compliment your other marketing material at open houses you are hosting this weekend. This flier is produced on a weekly basis and filed under the label "Open Houses." Click it to enlarge.

Hope you all find it helpful, suggestions to the flier you are welcome to post here and I will take into consideration.

Yesterdays Sell Off Not as Bad as It Seems

Yesterday was a not a good day in the mortgage backed securities market. However, all things considered it is not as bad as we may think based on these graphs. All things considered our market moving forward should rebound nicely this coming week. Let's take a look at the two day.

As you can see yesterday resulted in an 18 tick loss. You can also see an arrow with the word "roll" next to it. This points to the fact that yesterdays note rolled into the future trading note. This happens every month. Futures 99% of the time trading lower than current months due to the the unknown and higher level of risk. Consequently when roll occurs our market falls.

As a result pricing is slightly worse today, but "Don't Panic." Our market is showing signs of support which is evidenced by our being up 3 ticks currently on the day. Fridays are typically light in volume so Monday will be more exciting.

I will be publishing the open house flier shortly so stay tuned.

Morning Sell Off After Record Highs Broken

Yesterday we broke through records highs. It makes sense then that we would see a sell off where investors take a little profit. The five day graph to the left gives us a good idea of where we are and where we have come.

Although this sell off will result in reprices for the worse, you can clearly see we are within our current range of trading. In fact the retraction has brought us back under the current resistance levels. All things considered, this is business as usual.

We'll be tracking to see if this turns into something bigger, but all research currently indicates there is support for the current levels the mortgage backed securities market is trading at.

In closing let me remind everyone that tomorrow we will have a new flier published for your open houses, make sure to stop by.

Staggered Reprices

FYI... some lenders are repricing for the better this afternoon. Moving forward if the lender the client is approved with has repriced this afternoon, I expect that rate sheet to be better than tomorrow's opening... if they have not repriced... I anticipate their opening rate sheet tomorrow will contain the best pricing....

Flight to Safety... Rates IMPROVE

This morning we were down while waiting for the treasury auction results for the 10 year auction that went off earlier today. Although the results were not as strong as they could have been, they did support the current buy trend which forced treasury yields back down to current trading levels.

This market reaction sent the mortgage backed securities market into new territory squashing recent resistance levels which turned into today's afternoon trading support levels.

Up only 4 ticks on the day regardless we have broken the 103 price point on the 4.5% note coupon, and the 4.000% coupon is currently trading above 100. If we have a strong day of trading tomorrow we can expect very attractive rate sheets from virtually all lenders. With that said, lenders have yet to reprice these gains into their rate sheets and I doubt we will see better pricing this afternoon.

If you are currently floating your rate I would wait until tomorrow morning before considering locking. Open rate sheets tomorrow should offer better pricing than is available currently, but more importantly these auction results suggest these low rates are here to stay for some time.

A BIG Day for Rates

I will be posting in a couple of hours.... a BIG day for our market today with a ten year treasury auction, that we have just received results for. The markets have not had time to digest this information, as soon as it does I will be here with graphs and commentary.

A teaser... we wee down 4 ticks this morning in trading... not the end of the world or even a crisis, I don't even know if you can call this a true indicator for the day. The treasury auction is our lighthouse today.

More to come.

Moving Into Summer Rates Are At Historic Lows

The market is incredibly favorable right now. 4.25% on a 30 year conforming fixed, with and APR of 4.554%. How about 3.75%% on a 15 year fixed conforming, with an APR of 4.203%. This is a buyer opportunity if I have ever seen one.

Use this fact as an opportunity to contact clients that you have fallen out of contact with. This is a perfect reason to call. If they are in the market you don't have to be an expert on rates, just refer them to us and we'll take it from there and you can start working on finding them a home.

There are a number of buyers out there at are pissed (to not put to fine a word on it) about their having missed the tax credit. That may very well be the case, but those that we able to take advantage of the tax credit, were not able to take advantage of these historically low rates. New open house fliers will be available come Friday...

Between now and then let's hope that our market is able to breakthrough that horizontal red line. This would lead us to even lower rates.

Rates Hold... For Now

Rates are holding this morning at highs that have produced interest rates that are as low as they have ever been. Currently conforming 30 year fixed rates: 4.375% is coming at an upfront cost of .071, or 4.5% is paying rebate or nearly half a point (.463) for prime borrowers putting at least 20% down. Will these rates hold? They are holding for now, but the support for these rates is not very substantial.

A strong headline in short term markets, a surge in treasury yields (which we may see this week due to more auctions), Europe stabilizing... there is significant risk associated with our market right now, and the odds are stacked against the market posting any more gains. There is many ways the market can move against us at this point in time. We should be prepared for a sell off and higher rates at any point in time.

With that said on Friday I heard one bond analyst discussing the bond market. His statement caught me off guard and is worth sharing. He stated that the 10 year treasury yield could go as low as 2.500 to 2.000 percent. Although I do not believe this to be true the point is some analysts believe the treasury yield can move lower, and if it does there is a good chance the mortgage backed securities market will improve as well leading to even better rates. This is a gut shot play. I would wait for anything - lock if you're happy with your rate, if they move lower look to renegotiate before closing.

Rates are awesome right now... take advantage.

Weekend Open House Flier

Here it is... feel free to print this flier and use it as supplemental information for any potential clients curious about rates and getting preapproved. I will update this flier weekly to ensure all of you have current information for your open houses. If you would like to see changes made, I welcome suggestions. Comment... Moving forward you will find these fliers under the label open houses.

Rates IMPROVE! Wasn't Expecting That Awesomeness

If you read the post yesterday the call was higher rates moving forward. Man does it feel good to be wrong sometimes. A weaker than expected NFP (Non Farms Payroll) report can be sighted as our reason for the market gains today. All things considered if these gains hold through closing today, we'll be in an excellent position moving into the weekend for open houses and general prospecting.

In closing keep an eye out for an additional post a little later this afternoon which will include a picture that all can use as supplemental material for open houses. It is something I will be producing every Friday for those that are looking for current lending material to include in open houses. Below a yearly graph demonstrating we are at historic highs that lead to historic low rates. Comments welcome... Let's all make it a great Friday.

This is what we needed moving into the summer selling months.

Market Teetering

Read and comment on the post below this one! With that said... here's a look at today's market. Interest rates are getting worse right now, but they are still incredibly low. We've avoided a major sell off (thank the almighty) but must now prepare for a slow retraction similar to bleeding out from a gut shot.

At least it gives us a little time to get clients into homes before we see a big jump in rates. The jobs report tomorrow is something we're all interested in, but recognize it for what it is - a whole lot of government jobs that are unsustainable, a point investors are already discussing. Regardless it will be the guiding force in tomorrows market.

Open House Fliers...

Was thinking about it this weekend, and I am going to start publishing a flier that any agent and take and print off of this blog and use to supplement their marketing material at open houses. The fliers I will be producing will be updated weekly for the weekend open houses and will include the current interest rates for conforming and jumbo conforming interest rates.

This is your opportunity to suggest additional information that you think would be helpful for potential borrowers. Eye catchers, like graphs, specific background colors, style, etc...

All things considered I am confident this will serve as a useful tool to any agent that chooses to utilize it. Keep an eye you for it tomorrow. Moving forward I will be creating a new label titled open houses and posting all of these fliers in this area.

Rate Worsen... Inform your Clients

Interest rates are going up today... here is the graph supporting my claim. I anticipate this will result in new levels of resistance in the mortgage backed securities market moving forward. If I'm right, rates today despite their being slightly higher than yesterday will be the best rates in the weeks to come. Locking is the smart play, especially for borrowers that are buying a home that is at ceiling of what they qualify for, rates moving higher could compromise their ability to secure financing or require them to bring more money to the table.

The questions about this change in the market I am happy to address. Leave a comment, share your thoughts.

Market Consolidation Today... Better Rates May be Getting Worse

Well we are up in coupon which means better rates, but I am pessimistic that they are here to stay. As you will see in today's graph the market is currently consolidating. Consolidation typically leads to breakouts, and I am anticipating that the breakout that will follow this consolidation phase will be a sell off resulting in higher interest rates for consumers.

Now is a very smart time to lock... rate sheets are very favorable and the secondary market is suggesting this recent uptrend resulting in these lower rates is coming to an end. I do anticipate rates will remain low (for the time being), but not at the current levels.

Below you will see a snapshot representing the mortgage backed securities market along with the ten year treasury yield (yellow) which you can see is gaining ground right now. As this yield rises the mortgage backed securities tends to suffer due to sell offs. This results in higher rates. It is a very volatile market.... prepare for the worst and hope for the best... a locked rate can always be renegotiated should the market turn of the better, but a floating rate can never lock into a past rate sheet.

We are available for consultation and happy to discuss financing terms in detail.

Happy Memorial Day Weekend... Open Houses

Let me wish all of you a very happy Memorial Day Weekend and Memorial Day. On Monday we celebrate the men and women that gave their lives for our freedom. An amazing sacrifice for our Country which deserves our deepest respect and recognition.

My godfather, a proud veteran of the Vietnam War and resident of Vista, CA always reminds me that Memorial Day belongs to these heroes, which is why Veterans Day is a separate holiday celebrating the living veterans of war.

I hope you have the opportunity to set business aside for the weekend and enjoy this blessing we call freedom by spending your time with your loved ones, but if you are committed to working, let me suggest the following.

American flags at open houses this weekend will go along way. How about grilling some hot dogs in the front yard for those that stop by. Show them the home, then take them out front for a cold Coke and hot dog. It'll give you a good five minutes to talk about there plans for buying a home. This will set you apart while giving you time to learn a little about what they are looking for while building rapport. While you wait for people, you can work on your tan out front, meet the neighbors (renters often become buyers, and owners will eventually become sellers) and enjoy the sunshine. Don't forget your radio to keep it fun.

Advertising VA financing is an option many agents holding open houses this weekend may want to consider. I demonstrates your commitment to veterans and our armed forces, while recognizing their service, on a respectful holiday.

All things considered... everyone have a wonderful Memorial Day weekend, whether working or not, be safe, and when it comes to preapprovals we look forward to assisting you.

Interest Rates Recover... Sort Of

Rates this morning have recovered slightly from yesterdays sell off. I am anticipating we make up about half the losses we took yesterday. Even if this is true, I do not expect lenders to be very forth coming on the rate sheets. My expectations today is lenders will hedge on their rates sheets pricing slightly worse than they typically would. The simple fact of the matter is yesterday we lost quite a bit of ground... rates went from 4.375% to 4.625% on a conforming 30 year. Because we are moving into a long holiday weekend, banks will price slightly worse than they typically would on your usual business day. This is an order of protection, and business as usual, just something most do not discuss.


If a client is happy with what is currently offered and will be closing soon locking is the play, don't contort my words above to read "float," locking is the play right now. However someone that is a little more exposed to risk, tolerant of market swings, and does not need to lock immediately, may want to float to Tuesday to see how the market opens. Those that do I recommend making sure both you and your loan consultant are willing to make it an early morning. Being up for opening rates sheets and potential reprices would be the smart thing to do.

Interest Rates Rising - The Makings of a Firsale

ATTENTION: This could turn into a really bad day for interest rates. Have a look at the graph on the right. As you can see we are experiencing a serious sell off right now. We have broken out of our recent range. The current published par 30 year fixed interest rate is still 4.375% for prime borrowers however I am anticipating reprices for the worse shortly. I highly advise anyone that is looking to close to lock there rate immediately. As in right now.

There are a couple of points to consider. Let me borrow a quote from economist and trader Adam Quinones:

Good Morning. Today we celebrate the one year anniversary of "Black Wednesday"

"BLACK WEDNESDAY". A day when "rate sheet influential" MBS were sold by accounts of all types. Banks, Servicers, Pension Funds, Money Managers, and Hedge Funds...Real Money and Levered Accounts alike. After all was said and done, over $10bn in "current coupon" MBS was dumped by mortgage market participants. An amount not even the Federal Reserve could stand up to...

The fact that this sell of is occurring on the anniversary of Black Wednesday is very interesting and troubling. Moving into a long holiday weekend and a very uncertain market I think it is clear investors are looking to shore up funds. In doing so they do not have to concern themselves with "worrying" about the markets over the weekend, and they can reassess come Tuesday.

This may very well be the case, but that does not mean the the week is over. Point in fact we have a 7 year treasury auction going off today (don't forget about the 5 year auction yesterday which was nothing special). It will be very interesting to see how it is received. At this point in time, we need a strong auction to bring some investors back into our market. If on the other hand the auction is weak we could see further losses today leading to even higher rates.

I could continue to discuss reasons for this sell off, our being up 190 points on the DOW, the drop in jobless claims, etc... the bottom line is now would be the time to LOCK and secure a low rate for closing. There are storm clouds on the horizon - batten down the hatches and stay dry. This is the message I would be instilling on any buyers you have right now.

New Home Sales Jump in April 14.8 Percent

That's a pretty impressive rise in sales... regardless I do not think this number is sustainable or accurately represents the market moving forward...

It makes sense that home sales surged in the month of April. We may even see healthy numbers in the month of May, slowly tapering off in the month of June. Come July these numbers will most likely fall to much lower levels... This surge is fueled by the tax credit - plain and simple. As the tax credit was written you had to be in contract by April 30 and close contract by June 30. The saving grace of the real estate market right now is interest rates... some of the lowest in recorded history. With equities markets in question, a flight to safety has lead investors into long term markets namely treasury and mortgage backed securities. It is the influx of capital into the mortgage backed securities market that has brought rates down. This fact is troubling because if Europe gets there act together across the Atlantic and stabilizes, we will see less demand for treasuries which will bring the yield back up, which will indirectly encourage a sell of of mortgage backed securities which will lead to higher interest rates for home buyers... People need to forget about the tax credit. It is over (unless you are in the armed forces - then it has been extended until April 2011 with certain contingencies in place that must be met), you should not be buying a home for a tax credit anyway, it is first and foremost shelter, then an investment. Securing a low fixed interest rate now on you home is probably one of the smartest decisions one can make. When inflation hits, and it will with a vengeance, those with fixed rates will find themselves in a very lucrative position. It is a buyers market regardless of this expired tax credit.

Interest Rates Hold at Year Lows

Difficult to say what exactly is fueling the gains in the mortgage backed securities market; it could be the calamity across the Atlantic, it could be the DOW falling below 10,000 and reaching the lowest points in 2010, or perhaps the 10 year treasury yield falling below 3.200% (currently 3.14%)... whatever the reason, home loan interest rates are currently at historic lows. For conforming loans under 417,000, 4.375% can be secured on a 30 year fixed, and is actually paying a small rebate. Jumbo conforming 30 year fixed rates are around 4.75% also paying a rebate.

Considering the Case Schiller index is currently reporting home prices are currently at their lows, and we have recognize that a perfect storm has formed for home buyers. Anyone in need of a fast preapproval - don't hesitate to contact us.

Home Sales Moving Forward

Home sales were better than expected in April according to home sales numbers released, showing a gain of 7.6 percent for a seasonally adjusted annual rate of 5.77 million, better than the 5.63 million economists had been expecting. This boost was clearly due to the tax credit offered (and now expired for everyone but armed forces, intelligence and foreign service members) earlier this year.

This number suggests our market is recovering, however this figure is riddled with innuendos... the tax credit incentive, for example suggests this figure is bloated and will fall sharply now that the tax credit has expired. In addition mortgage applications to purchase homes fell sharply to the lowest level seen in 13 years. Add the foreclosure inventory to this equation, consider the defaults currently playing out and it is clear this figure is not as strong as we would all like. In fact the current estimated time it takes to move inventory 8.4 months.

Interest rates are the saving grace right now, but with California unemployment around 12 percent, finding home buyers is becoming a harder and harder feat.

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The title of this article was home sales moving forward.... now that we are on the same page, share your thoughts on the real estate market.

My thoughts specifically are rates despite being very low right now, will be rising soon, probably after the mid term elections. When rates do start to rise, the potential for substantial increases is serious. Inflation will inevitably set in leading to sell offs and high offered rates. Due to the nature of the problem these increases could be substantial. When considering this in light of inventory, which I anticipate will not subside anytime soon and future home sales may remain subdued moving forward.

Lenders In Open Houses

Having long standing relationships with a number of real estate agents, there have been times when they have asked me to assist them at an open house they are hosting. If my schedule is open, I have yet to turn down one of these invitations, however a question is raised in my attending; does having a lender at an open house with a real estate agent add to the allure of that open house complimenting the listing agent, or do they simply end up stepping on each others toes?

When I participate at an open house I discuss my roll with the listing agent so we are very clear as to who steps in where to answer what questions. Generally speaking, unless otherwise agreed, I take a side seat to the agent, allowing them the opportunity to answer the question they viewer may have about the home and area. Inevitably the listing agent will casually inquire as to whether or not they have discussed their financing options with a lender. Regardless of their answer (yes or no), it is at this point in time, I am introduced as someone that can handle financing.

Typically this will lead the conversation in a different direction which I then shine, discussing current financing options available and everyone's favorite topic, interest rates...

You may not think it, but this formula is successful for one reason, it provides both of us (the listing agent, and me) to carefully study the potential buyer to see how serious they actually are. Typically when we are in a conversation, the unfortunate fact is why spend most of the time thinking about what we are going to say next not what is being said to us.

When you are placed in a situation where you are allowed to simply listen and watch a conversation, subtle nuances are picked up that are otherwise overlooked, fidgeting, breaking eye contact, specific words used ("will be buying", as opposed to "may be buying"), etc...

After the potential buyer has left, we then have the opportunity to discuss what we thought of them as potential buyers, and come up with a specific action plan to follow up.

This type of meeting can also end a very different way. If the potential buyers are seriously looking and without an agent, there is no reason why the listing agent cannot leave the open house and take the clients to some other homes that they may want to look at, that are listed but not "open" that particular day.

In the meantime, I a licensed broker, can hold down the open house, greeting any other potential buyers that may show up.

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I am interested in your thoughts. Agents, what has your experience been having a lender present at open houses? Are you for it? Against it? Do you find it useful? Problematic? Do clients like it? Feel more pressured? Time to leave your thoughts.

Lawmakers Claim to Have the Votes for Financial Reform

Cloture on financial reform may happen today as lawmakers on the hill are touting that they now have the 60 votes required to move financial reform forward. This clearly will effect the real estate market considering how closely tied it is to finance institutions. Point in fact there are rumors circulating that suggest the new reform would require all home owners to come in with at least 5% down. In other words, financing vehicles offering options over 95% financing would no longer be available.

This would create a ripple effect on our market as FHA and Homepath are forced to rewrite their guidelines. The question remains what about VA loans, and USDA home loans, would they too fall under this new lending requirement? If so it would spit in the face of two programs that have been relatively successful when reviewed side by side to other financing vehicles, namely agency and FHA home loans.

Personally I think this would be misguided legislation if lawmakers start requiring homeowners to come up with a minimum of 5% down.

All things considered, this is an important bill that we all should be paying attention to. Passing this bill could force rates higher while limiting future financing options.

In my humble opinion I think this is misguided legislation... financial reform is a clever mangling of letters that actually spell financial regulation. A more noble effort and better way for lawmakers to spend their time would be overhauling Fannie and Freddie. Yet again we're putting sunscreen on a sunburn when we have a much deeper problem, skin cancer.

Rates Break Through Range... New Year Highs... bringing Rates LOWER

This is unprecedented. I don't know any other way of explaining our market. This is clearly a flight to safety. Fear of international markets, questions about our own economic recovery, our national debt skyrocketing; investors are beginning to see equity markets as overvalued. Consequently, the long term markets are the primary beneficiary.
As the mortgage backed securities market climbs leading us to lower interest rates, its benchmark competitor, the ten year treasury's yield is steadily falling. It is important to understand that these are typically inversely related. That is, when the treasury yield climbs, the mortgage back securities falls, when the treasury yield falls, the mortgage backed securities rises.

Let's take a look at our market...

A one month graph of the mortgage backed securities market... the red dashes highlight our old range, the blue dashes highlight our new range... as you can clearly see we have broken out of our new range leading once again to the best rates of the year. Is this sustainable?


Here is a look at our last five days of trading... let's take a close look at the arrows... the green arrows clearly demonstrate the bulls are gaining momentum on the bears... the green arrows consistently grow in size and get steeper, while the red arrows representing the bears continue to get smaller and flatter... Until the international markets stabilize, I think these gains may actually hold.

Tomorrow will be an interesting day, options expire next tomorrow suggesting a slow and conservative trading day in equities market which is good news for us, however Friday's usually a profit taking day as investors shore up funds moving into the weekend. All things considered, I expect tomorrows trading to be much calmer than that we have recently been experiencing.

320,000 Homeowners Yet To Be Foreclosed On

An amazing story broke today in The Wall St. Journal that stated there are currently 320,000 homes backlogged to be foreclosed on that are over a year late in payments. Let's do some quick math and divide by 50, that's 6,400 homes per State. Simple math suggests significant inventory will be coming onto the market in the near future. Now I will be the first to admit that this math is inaccurate, certain parts of the country were hit harder than others.

Be that as it may, California currently at 12% unemployment certainly has its share of homeowners currently in trouble.

This will make for an interesting move forward... clearly bank owned inventory is likely to continue to dominate the marketplace. This suggests home values will remain somewhat static moving forward.

Rates Holding in New Range

One word - volatility. Regardless we are still trading within the new range. With that said we started today's trading day off with a sell off before bouncing back to the high side of our range. This is an important distinction that needs to be made because opening rate sheets will have priced in these losses. It makes sense to wait for afternoon rate sheets which will offer better pricing reflecting these recent gains. If you're looking to lock a loan - I'd wait about 4 hours... maybe sooner. New rate sheets will most likely be published moving into the afternoon. Depending on where the headquarters of the lender is located, afternoon is a relative term. Reprices from various lenders will begin to be offered around 10 am Pacific Standard and should continue throughout the day or until the market makes a downward correction.


This downward correction could happen very quickly... See the downward trend on the ten year treasury... should the treasury yield rise (3.5 is a primary marker), our market, will suffer... think of an iceberg breaking off a glacier and falling into the ocean. It can be that quick.

Price vs. Value - Terminology Matters

Okay... today we switch gears a little bit and discuss two terms that many mistakenly use interchangeably. When discussing a home with a potential buyer or you're looking to secure a listing from a seller, it is important to understand the difference between the words that we choose to use. Price and Value are two words that agents often confuse.

Price - the listed or advertised cost of something.

Value - the underlying worth of something.

If we look at these terms and their specific connotations we begin to understand the difference. A price is static and impersonal. The value is personal and definable.

Someone's home, whether buying or selling, is very personal.

Therefore we start with value to determine the final price. Ultimately this is where agents begin to make the mistake. They neglect the term "value" and use the term "price" throughout their presentation. In doing so the client is conditioned to assume the price and value are one in the same. Separating these terms in your initial presentation will not only separate you from other agents that do not make this distinction; it preps your client for the negotiation stage while ensuring their expectations are realistic.

For example if a seller insisted their home's value was 500,000 dollars, when the market supported prices of 400,000. It would be safe to say these particular clients are not realistic in their expectations. Even if you do successfully take the listing, and sell the home for 450,000 dollars, they will deep down, still be a little spiteful... and although this is not any fault of yours, it is your fault they didn't get the 500,000 they thought their home was worth.

Here's another example... a couple thinks their home's value is 500,000, while the market supports a sale price of 600,000. Setting the list price at 620,000 and negotiating down to 590,000 for a final sales price is still going to produce a happy seller. You just sold their home for 90,000 dollars more than they thought it was worth.

Use these terms to your advantage... when used correctly they are excellent qualifiers, they will separate you from other agents that are not as thorough in their analysis and market representation, and you setting realistic expectations for your clients.

After all the home's "value" is what it is worth... the "price" is a subjective number based on a marketing strategy.

Home Loan Rates Settle into New Range

Despite yesterday's late sell off, the secondary market and mortgage rates have improved this morning re-establishing our new range. With that said this will be tested based on the international markets starting to find their foothold. There is talk over the pond that the Euro is stabilizing. These recent gains resulting in the lower rates are primarily due to the uncertainty of markets overseas which brought investors to our long term markets. Should the Euro situation work itself out we could see a retraction. Although this is on the back of my mind, it is not my real fear.


Moving forward my real fear is inflation. The Fed is meeting today and eventually one of these meetings will result in their pointing out an underlying concern about inflation and when that happens rates will rise, and they will rise quickly. Inflation is our nemesis when it comes to offered rates.

Here is this mornings graph illustrating five days of trading and our new range. Some agents out there may be wondering why I am so focused on interest rates right now. After all the last five posts or so have been about rates. Point in fact this is a major selling point right now that you should be confident talking about with your clients. Of course I am happy to field the bulk of questions addresses rates and finance markets for you, but that does not negate the fact that these low rates support a buyer or a seller accepting an offer. A buyer, so they can lock in these low rates, a seller because an offer may be taken off the table as rates rise and borrowers begin to have more and more trouble qualifying for home loans (higher rates after all mean higher monthly payments which they must qualify for).

Retraction from Highs this Afternoon....

Market update... we have seen a retraction off recent highs bringing us back down to opening levels. Point in fact we actually closed one tick down. This will inevitably lead to worse pricing on rate sheets. Cross your fingers for a bounce tomorrow at open.

Regardless of this slide, profit taking is a part of investing. All things considered we have a lot to be thankful for. We are after all still within the new established range. Here's a snapshot for all you eye candy junkies.


This retraction is primarily due to the high treasury yields evidenced by the yellow graph below which illustrates the 10 year treasury yield.

Questions and comments welcome.

Also... we just published our first news letter for real estate agents which we are very excited about. Here is a link to that newsletter... don't forget to subscribe and share it with fellow professionals.

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