Where are Mortgage Rates headed?

"LIFE IS NEVER BORING...BUT SOME PEOPLE CHOOSE TO BE BORED." Wayne Dyer Yet even if Traders had wanted to be bored last week, the financial markets had other plans. Volatility reigned supreme, with large swings throughout the week in Stocks, Bonds, and home loan rates — and once the smoke cleared, home loan rates were slightly worse than where they began the week.
What caused all the volatility? You name it — continuing concerns on the liquidity and stability of the financial markets; the Federal Reserve at work, cutting the Fed Funds and Discount Rates by .25% and the opening of a new auction facility; a red hot Retail Sales Report; and last but certainly not least, the Producer and Consumer Price Indices both showing inflation to be much higher than expected.
The big mover was the Fed rate cut of .25%, which was a disappointment to the financial markets, as a deeper cut was hoped for. The reaction was very negative for stocks, as the fear of a recession amidst the current credit crunch grows. There are increasing concerns that the Fed is not getting ahead of this problem.
But it is not an easy job for the Fed because they may be fighting a possible recession with a hand tied behind their back...this is due to higher levels of inflation. Surely inflation is still at reasonable levels, but even a little stronger inflation can take a major toll on our lifestyle over time. High levels of inflation have caused unrest, revolt, poverty and wars. It is possible that the Great Inflation of 1920 in Germany eventually led to WWII. During that time, prices rose over an almost unimaginable 1000 times a year! Savings were wiped out and imagine this...the cost of a loaf of bread went from 20 Marks to 20,000 to 20,000,000. And in Mexico, hyperinflation caused a crisis in the peso that has led to extreme levels of poverty. Of course, the US is nowhere close to this type of problem, but inflation is a very serious issue. And with the current rate of inflation in the US ticking higher and towards the upper range of acceptable limits, additional Fed cuts would push inflation even higher. So should the Fed risk a recession to protect against inflation or move to avoid recession and risk inflation? This will likely be one of the hotter economic topics of 2008.
So the week was certainly far from boring — and the volatility may just continue ahead. Yet overall, home loan rates continue to be at very low levels — so if you, or a client, friend, family member or neighbor have been contemplating a refinance or home purchase — now is the time to start making plans. Although the holiday season is a busy time, I am glad to make time for you and your referrals. And even if you don’t have a home loan need at the present time — it’s always wise for us to examine your overall debt structure and financial goals, just to ensure that you are positioned in the best possible way.
AND SPEAKING OF PLANNING...WHAT WOULD YOU DO IF $64,000 LANDED IN YOUR LAP TOMORROW? YOU MIGHT HAVE A FEW IDEAS IN MIND INVOLVING A TROPICAL HOLIDAY — BUT WOULD YOU REALLY KNOW WHAT TO DO IF YOU SUDDENLY CAME INTO AN INHERITANCE? THAT’S THE QUESTION OF THE DAY — SO DON’T MISS THIS WEEK’S MORTGAGE MARKET VIEW.

President Woodrow Wilson signed into law the Federal Reserve Act in 1913,
creating the Federal Reserve, the nation's central banking system. The Federal
Reserve, or Fed, has also been called "the gatekeeper of the US economy" because
of its unique power to influence US financial and credit markets.
Comprised of seven presidentially−appointed Board of Governors; the Federal Open
Market Committee; 12 Federal Reserve Banks; and private U.S. banks and advisory
councils, the Fed's mandate is "to promote sustainable growth, high levels of
employment, stability of prices to help preserve the purchasing power of the dollar,
and moderate long−term interest rates." In other words, the Fed's job is to regulate
the nation's financial institutions while simultaneously keeping inflation in check.
To accomplish this important yet difficult task, the Fed studies economic indicators,
creates, and then implements monetary policy − its specific plan of action or "target" for the economy − based on its
findings. And while there are many tools at its disposal, the Fed has three main instruments of monetary policy: open
market operations, interest rates, and reserve requirements, all of which can impact the mortgage industry.
Open market operations, the principal tool used by the Fed in its monetary policy, consist of the buying and selling of U.S.
government and mortgage−backed securities (treasury bonds, notes, and bills) on the "open market." Basically, the Fed
buys when it wants to increase the flow of money and credit, and sells when it wants to reduce it.
The Fed also controls two important interest rates: the discount rate and the fed funds rate. The discount rate is the
interest rate charged by Federal Reserve Banks to commercial banks and other eligible financial institutions on short−term
loans. The Federal Reserve Banks offer three discount window programs to depository institutions: primary credit,
secondary credit, and seasonal credit, each with its own interest rate. Experts say that changes in the discount rate can
serve as a clear announcement of a change in the Fed's monetary policy. These changes are important because they can
impact lending rates for banks and interest rates for the open market.
According to the Federal Reserve, the fed funds rate is the interest rate at which depository institutions lend balances at
the Federal Reserve to other depository institutions overnight. Like the federal discount rate, the fed funds rate is another
tool the Fed can use to control inflation and other interest rates. This interest rate is often a source of intense speculation
whenever the Federal Open Market Committee meets, creating uncertainty that can move the financial markets as well.
Finally, think of reserve requirements, the last of the Fed's main monetary policy instruments, as the cash deposit
requirement for a secured credit card. Reserve requirements represent the specific portion of deposits that banks are
obligated by law to keep in non−interest−bearing funds at a Federal Reserve Bank, typically 10%. Consequently, as banks
attempt to stay as near to the reserve limit as possible without dropping below, they constantly lend money back and forth
to each other. The Fed, interpreting signs of inflation in its economic indicators, may choose to reduce the amount of
reserves available to banks by slowing the selling of securities. Generally, this causes interest rates to rise, the economy
to slow, and inflation to slow with it. The reverse is generally true when indicators suggest a slowing economy or deflation.

If you or your clients have any questions about the Federal Reserve, inflation, interest rates, or any of the topics
discussed in this piece, please don't hesitate to give me a call. The Fed's monetary policy is not only fascinating,
your clients would benefit greatly from understanding its impact on the financial and credit markets

LOWER FED RATE MEANS OPPORTUNITIES ON THE RISE

Lower Fed Rate Means Opportunities on the Rise
For the first time in more than four years, the Federal Reserve cut its Fed Funds Rate, which directly impacts millions of American borrowers. And while this important decision has many implications, there’s still some debate among experts about what this means to the economy as a whole.
The Federal Reserve meets again in six weeks, and no one is certain how market volatility and inflation concerns will affect their future policy and decision-making. Bottom line: Take advantage of this opportunity while you still can. Call me right away.
If you’re looking to capture a lower interest rate for refinancing or buying a home, this could be your best opportunity to do so.
If you have an Adjustable Rate Mortgage, while this rate cut might help to improve your situation, now is the time to refinance into a fixed-rate loan.
If you have a Home Equity Line of Credit (HELOC) or credit cards tied to the Prime Rate, the Fed’s cut in the Fed Funds Rate just put a little money in your pocket.
Borrowers waiting for a lower fixed-rate mortgage may be waiting for a long time. The chart below clearly shows how Fed Funds Rate cuts do not translate into cuts in fixed-rate mortgages. In January 2001, the Fed Funds Rate was at 6% and 30-year fixed rates averaged 7.03%. By December 2001, following 4.25% in cuts throughout the year, home loan rates were actually up to 7.07%.

Yes, we may experience some temporary improvements in rates in the coming weeks, but the markets will remain volatile as long as inflation and recession are a possible threat to the Federal Reserve's long-term economic policies.
If you’re looking to refinance or buy a new home, call me. I will show you why waiting can cost you a lot of money.

The Truth About the Mortgage Market
By Jesse Vasquez Financial Consultant
Countrywide Home Loans

Tampa, FL – Subprime mortgages have now been credited for bankrupting well over 110 lenders and seriously damaging operations at many major mortgage firms. They've reportedly wiped out 5 hedge funds, tens of thousands of jobs, and have led to millions of foreclosures with millions more on the way. And, as if that weren't enough, subprime mortgages are also blamed for massive volatility in the stock, bond, credit, futures, and real estate markets here in the US and around the globe. Some say losses in the mortgage securities market alone could reach hundreds of billions of dollars this year. This means that, for any Americans looking to buy, sell, or refinance a home, they are confronting a very different market from the one that existed just 6-12 months ago. How did this happen? The recent real estate boom was fueled by a period of record home appreciation and historically low interest rates. Banks, in order to compete, loosened guidelines and began offering more funding to more borrowers through riskier, non-conforming or "exotic" mortgages. These ideal lending conditions persisted for several years, supported by high demand, historical real estate data, home prices, and massive trading volume/profits on mortgage-backed securities and other financial instruments on Wall Street. Then, in 2006, a slowdown in real estate led to a deterioration of home values, an increase in inventories, and ultimately to today's tightening of credit guidelines, leaving many investors unable to sell or refinance out of their existing positions. Many Americans who had tapped into their equity were suddenly tapped-out and overextended as home values fell. Foreclosures followed in record numbers and a re-valuation of mortgage bonds and other financial instruments created the credit/liquidity domino effect we're now experiencing. Unfortunately, it's going to get a lot worse before it gets better. According to the latest estimates, over 2 million subprime and Alt-A adjustable rate mortgage (ARM) holders will face payment increases of up to 30%-100% when their loans reset in the next 2 to 18 months. These loans make up less than 40% of the total mortgage market, but the negative effects, as we have seen, of increased foreclosure activity can have a ripple effect throughout the industry and around the globe.

What does this mean to you and your mortgage?

Sellers:
If you're planning on selling your home, be prepared for an even smaller pool of qualified buyers. While some experts predict a settling of this credit crisis over the coming year, tightened credit guidelines and diminishing mortgage products could knock out as many as 15%-30% of potential qualified buyers. Now is not the time to sit and wait for the best possible price. Have a serious talk with your real estate agent. Having experienced buying/selling transactions in your area, he or she can help you price your home accordingly. He or she can also help ensure that your buyers are pre-approved and stay pre-approved throughout the entire transaction.

Buyers:
Get pre-approved by your mortgage professional. While there are a lot of great deals out there, getting credit is becoming tougher and tougher, and it's taking longer and longer to complete a transaction. Remember, what you qualify for today could change tomorrow in a volatile market. For those looking to refinance, keep this in mind. There is no time to delay! Communicate with your lender. Don't do anything that could negatively affect your credit, and make sure you get all your documentation in on time.

ARMs Borrowers:
If your ARM is scheduled to reset in the next 2-18 months, you need to schedule an appointment with a mortgage professional right away. Whether your ARM is subprime, Alt-A, or even if you have a pre-payment penalty, don't let a default or foreclosure situation sneak up on you. Did you know that your monthly payments can increase anywhere from 30% to 100% once your loan resets? At the very least, give yourself the peace of mind of knowing what your adjusted payment will be. Borrowers with less-than-perfect credit: Each week it seems lenders are shedding more and more mortgage products. Many lenders have stopped offering No-Doc loans and are reducing all forms of Stated-Income loans. While it might be challenging, borrowers with credit issues need to see a loan expert. Often they have credit repair resources and other strategies to help you reach your financial goals.

Finally, there's an important concept to embrace: all markets, while cyclical in nature, are self-correcting, be it credit, real estate, stocks, or bonds. For the last 6 or 7 years, real estate was booming and riding high. The correction we're experiencing now – while it seems harsh and could get much worse – is, in a sense, "natural" and directly related to the extremely loose guidelines and perhaps overzealous lending and leveraging during the boom cycle.


Jesse Vasquez is affiliated with Countrywide Home Loans,and is a Licensed Broker, in Florida, Department of Real Estate. For a free consultation or more information about the mortgage market, contact Jesse Vasquez 813-546-8520





SUBMITTED BY:
Jesse Vasquez
813-546-8520
FAX- 813-433-5699
EMAIL jesse_vasquez@countrywide.com
http://www.loansbyjv.com/

The Truth about the Mortgage Market

September 20, 2007
The Truth About the Mortgage Market
By Jesse Vasquez Financial Consultant
Countrywide Home Loans

Tampa, FL – Subprime mortgages have now been credited for bankrupting well over 110 lenders and seriously damaging operations at many major mortgage firms. They've reportedly wiped out 5 hedge funds, tens of thousands of jobs, and have led to millions of foreclosures with millions more on the way. And, as if that weren't enough, subprime mortgages are also blamed for massive volatility in the stock, bond, credit, futures, and real estate markets here in the US and around the globe. Some say losses in the mortgage securities market alone could reach hundreds of billions of dollars this year. This means that, for any Americans looking to buy, sell, or refinance a home, they are confronting a very different market from the one that existed just 6-12 months ago. How did this happen? The recent real estate boom was fueled by a period of record home appreciation and historically low interest rates. Banks, in order to compete, loosened guidelines and began offering more funding to more borrowers through riskier, non-conforming or "exotic" mortgages. These ideal lending conditions persisted for several years, supported by high demand, historical real estate data, home prices, and massive trading volume/profits on mortgage-backed securities and other financial instruments on Wall Street. Then, in 2006, a slowdown in real estate led to a deterioration of home values, an increase in inventories, and ultimately to today's tightening of credit guidelines, leaving many investors unable to sell or refinance out of their existing positions. Many Americans who had tapped into their equity were suddenly tapped-out and overextended as home values fell. Foreclosures followed in record numbers and a re-valuation of mortgage bonds and other financial instruments created the credit/liquidity domino effect we're now experiencing. Unfortunately, it's going to get a lot worse before it gets better. According to the latest estimates, over 2 million subprime and Alt-A adjustable rate mortgage (ARM) holders will face payment increases of up to 30%-100% when their loans reset in the next 2 to 18 months. These loans make up less than 40% of the total mortgage market, but the negative effects, as we have seen, of increased foreclosure activity can have a ripple effect throughout the industry and around the globe. What does this mean to you and your mortgage? Sellers: If you're planning on selling your home, be prepared for an even smaller pool of qualified buyers. While some experts predict a settling of this credit crisis over the coming year, tightened credit guidelines and diminishing mortgage products could knock out as many as 15%-30% of potential qualified buyers. Now is not the time to sit and wait for the best possible price. Have a serious talk with your real estate agent. Having experienced buying/selling transactions in your area, he or she can help you price your home accordingly. He or she can also help ensure that your buyers are pre-approved and stay pre-approved throughout the entire transaction.Buyers: Get pre-approved by your mortgage professional. While there are a lot of great deals out there, getting credit is becoming tougher and tougher, and it's taking longer and longer to complete a transaction. Remember, what you qualify for today could change tomorrow in a volatile market. For those looking to refinance, keep this in mind. There is no time to delay! Communicate with your lender. Don't do anything that could negatively affect your credit, and make sure you get all your documentation in on time. ARMs Borrowers: If your ARM is scheduled to reset in the next 2-18 months, you need to schedule an appointment with a mortgage professional right away. Whether your ARM is subprime, Alt-A, or even if you have a pre-payment penalty, don't let a default or foreclosure situation sneak up on you. Did you know that your monthly payments can increase anywhere from 30% to 100% once your loan resets? At the very least, give yourself the peace of mind of knowing what your adjusted payment will be. Borrowers with less-than-perfect credit: Each week it seems lenders are shedding more and more mortgage products. Many lenders have stopped offering No-Doc loans and are reducing all forms of Stated-Income loans. While it might be challenging, borrowers with credit issues need to see a loan expert. Often they have credit repair resources and other strategies to help you reach your financial goals. Finally, there's an important concept to embrace: all markets, while cyclical in nature, are self-correcting, be it credit, real estate, stocks, or bonds. For the last 6 or 7 years, real estate was booming and riding high. The correction we're experiencing now – while it seems harsh and could get much worse – is, in a sense, "natural" and directly related to the extremely loose guidelines and perhaps overzealous lending and leveraging during the boom cycle.


Jesse Vasquez is affiliated with Countrywide Home Loans,and is a Licensed Broker, in Florida, Department of Real Estate. For a free consultation or more information about the mortgage market, contact Jesse Vasquez 813-546-8520





SUBMITTED BY:
Jesse Vasquez
813-546-8520
FAX- 813-433-5699
EMAIL jesse_vasquez@countrywide.com
www.loansbyjv.com

If you have seen the Pixar animated film "Chicken Little" you will know this phrase, "The sky is falling the sky is falling" and in the beginning of the movie it really was not however at the end of the movie it really was. Why am I saying all this, well here is the reason to my madness. I believe there is a problem out there! I am not blind I see what is going on, 20+ years in this business I have seen it all. I also see a definite problem which I have not seen before and that is "credit crunch" while at the same time in the middle of an obvious "buyers market" , however where are the buyers.

The pool of potential buyers will shrink as many find it difficult, if not impossible, to obtain mortgage financing. Experts have speculated that the number of potential buyers will contract anywhere from 15% to 30%. Sellers should also be aware that increased foreclosures can depress community values and result in a glut of local inventories, which could further drive down home prices.” Its not pretty out there, however if you are a buyer looking to buy a home or two, hey don't wait!!!!! NOW is the time to get out there, find yourself a reputable realtor and have him/her do the negotiations for you. You will probably get a great deal on a home. However another advise don't wait to much, banks are really tightening there belts and this will make it harder for you to get financed. Buyers need to get pre-approved before entering the market. While there are a lot of great deals out there, getting credit is becoming tougher and tougher, and it’s taking longer and longer to complete a transaction. What you qualify for today could change tomorrow in this volatile market.”

I believe this is all Great news for buyers that have been looking for a "deal" now is the time to buy! Rate are still at historic low point, however who knows till when? dont put it off any longer. Its time to buy for tomorrow might be to late.