Interest rates have been starting to improve due to the weakness in securities ( Stock Markets). The security markets have been dropping due to uncertainty in the proposed Chinese stimulus plan; yesterday the market rallied in anticipation that the Chinese government was going to increase the amount stimulus; many investors forecast that China will be leading us out of the global recession. Bank stock prices are also weighing heavy on the overall market; thus far the government’s approach to saving them is not giving investors any confidence that a solution is in sight. The problem is that that the more support the bank gets from the government, the more investors fear it will be nationalized ( government controlled) which means that the government has first position over the common share holders; this drives down the stock price, which then makes the bank weaker, which means more government support. It is like watching a dog chase his own tail.
This bad has a silver lining to those of us in the real estate industry; when investors pull money out of stocks, they start buying bonds ( Mortgage backed securities / treasury bills) which drives down the interest rates.
If the market continues to weaken we could see rates improve even further in the near future, which is a boost for the coming buying season.
Current Market Rates
30 Year Fixed
4.875% (up to $417,000) 5.25% ( up to $729,750) 5% ( FHA) 5.5% ( investment property 1 unit 1 point min)
Super Jumbo (up to $2 million)
5Yr Fixed IO ( 5.25%) 7Yr IO (5.5%) 10Yr IO (5.75%) 30 yr fixed (6.25%)
The Home Owner Affordability and Stability Plan details have been trickling out. Here is link released yesterday on the National Association of Realtors website
www.realtor.org/government_affairs/gapublic/home_afford_stability_plan_key_components
The link gives details on the three main points. Please feel free to contact us if you have any questions.
Mark Rafeh 805.915.1612
President – Loan Centers of America
