Mortgage Blog

This week was packed full of economic news which has sent our mortgage markets off to a whole new set of volatility. To start the week off we saw consumer confidence slide to it’s 40 yr low – well duh! You and I have known this to be true for months and I have been saying all along the prior numbers were no way accurate but I guess they finally got it right for a change.

The best news we have seen in a long time is that new home sales saw an increase of about 464,000 new homes sold. This is mostly due in part of the smoking hot deals out there and builders trying to dump their inventories to create some liquidity on their part. This honestly in a misleading indicator knowing what is really happening in our market because these smoking deals actually drive down the values in neighborhoods.

The FEDs decided to lower the Fed Funds rate by .50 basis points this week which will eventually trickle down to Prime but as you know from my prior announcements and education that this does NOT have a direct correlation to mortgage backed securities. It actually has the opposite affect to mortgage rates. A Fed movement downward is construed as an inflationary fighting move which mortgage bonds hate. So, yes we moved up in rates this week and hopefully you told you clients from my last report to lock in then.

The GDP (gross domestic product) which is what determines if we are in a recession or not showed a decrease of .3%. There needs to be 2 consecutive quarters of negative GDP growth to be officially in a recession and here we are! I have been saying this for 6 months our economy is in a recession but the proof is finally in the pudding!

For now, again I am recommending to Lock in those interest rates today as the volatility continues and the bond market is actually reacting opposite to what it should. As an example the bonds should have rallied big time on the consumer confidence numbers this week but actually fell due to the Feds anticipation of the announced rate reduction.

Tip for the week. If any of your clients need help doing loan modifications there are a ton of unscrupulous companies popping up daily offering outrageous fees to the consumer. Most of these companies originate out of California and haven’t we’ve seen enough or learned from California’s mistakes in the past? Call me instead, because I have a much better solution that I have spent weeks preparing and will provide a much higher/honest service for homeowners who want to save their homes!

Randy Reed

303.524.9191