Market Update April 18th

Market Update April 18th:

This morning’s rally in the bond market today has been good considering rising interest rates earlier in the week. Mortgage pricing went down for the day.

The chances of 50 basis points of easing at the FOMC meeting April 30 have evaporated and are now chomping away at the 25 basis point cut signaling that the credit crisis could be near the end.

***Do you know someone who wants a mortgage at less than 5%? Call me for details.***

***100% financing to $500,000? Ask me how.***

See the articles below: The big news for the day was Google reports a 30% profit increase which blew most analyst projects out of the water.

http://www.mydesert.com/apps/pbcs.dll/article?AID=/20080412/BUSINESS04/804120312/1043/business04
http://money.cnn.com/2008/04/18/markets/markets_newyork/index.htm?postversion=2008041817

Have a great weekend and by the way, I’m never too busy for any of your mortgage referrals!

Timely Tax Information

Welcome back to a beautiful Monday morning! Check out this week’s newsletter, which covers timely tax information to help you pass along to your clients. Taxes are a hot topic so pick a quick tip and spread the word. Also, the PCE index, or what I like to call the inflation report, is within the target range of 2% which is good news for mortgage rates. To learn more just read the newsletter below.

Make it a great week!

Although the newsletter is not attached to see the tips simply ask to be a part of the distribution list.

St. Patrick’s Day

I’m sure you’re off to a very green St. Patrick’s Day! Last week the financial markets were pretty green for you too with mortgage rates dropping by as much as 0.25% for most programs. But be careful! With inflation numbers down reported last week the Fed could cut Fed rates by another 0.75% in tomorrows meeting. These rates are tied to the Prime rate, consumer loans, and credit cards, but the Fed rates are what the Fed lends to banks overnight! With a Fed cut, inflation could rise and when inflation rises mortgage rates are likely to go up. I recently sent out an article explaining this. If you’d like to look at it again please let me know. Make it a great week!

Oh by the way, I’m never too busy for any of your purchase or refinance mortgage referrals! Have a safe and fun St. Patrick’s Day!

MMG Weekly For the week of Mar 17, 2008 — Vol. 6, Issue 12
“JUST WHEN I THOUGHT I WAS OUT…THEY PULL ME BACK IN.” Al Pacino in the 1990 film, The Godfather III And if Bonds and home loan rates thought they were out of the days of volatility…they got pulled right back in, as last week brought daily price swings of almost historic proportions. For the week overall, fixed home loan rates improved by about .25%.

What led to the dramatic action this week? The bipolar emotional state of the markets began deeply depressed on Monday, but then were filled with joy Tuesday, when the Fed made an interesting move by announcing the creation of the new Term Securities Lending Facility (TSLF). The TSLF will provide borrowing banks with $200 Billion to draw on to help inject liquidity into the credit markets, and further, will accept some mortgage-backed securities as collateral, which effectively may help to “upgrade” the value and perception of battered Mortgage Bonds.

But in the meantime…struggles are still being played out related to the downgrade and losses experienced by companies holding massive amounts of mortgage-backed securities. Headlines hit on Thursday about The Carlyle Group, which manages a portfolio of mortgage-backed securities, not being able to meet a margin call and being forced to sell off large amounts of mortgage paper into the markets at great financial losses. Then on Friday, the news broke that financial brokerage and investment banking giant, Bear Stearns had suffered enormous losses, and their lack of liquidity endangered them from going out of business…or “sleeping with the fishes”. The new aforementioned TSLF is designed to help this type of liquidity problem, but it will not go into effect for a few weeks, and Bear Stearns would not last that long. Coming to the rescue with loans were both the NY Fed and JP Morgan Chase. These sure are exciting times.

One bright spot for the financial markets was a low consumer inflation reading. The Overall and Core Consumer Price Index (CPI) figures were reported unchanged, far cooler than the expected increases of 0.3% and 0.2% respectively. These tame inflation numbers give the Fed a green light to cut the Fed Funds Rate by another .75% at Tuesday’s meeting…but read on to understand exactly how this cut may impact YOU.

IF THE IDEA OF KEEPING BUSINESS IN THE “FAMILY” CONJURES UP IMAGES OF MICHAEL CORLEONE AND OFFERS THAT CAN’T BE REFUSED – YOU’LL WANT TO READ THIS WEEK’S MORTGAGE MARKET VIEW TO LEARN SOME TIPS ON RUNNING A SUCCESSFUL FAMILY BUSINESS, WHERE YOU LIKELY WON’T HAVE TO WORRY ABOUT EITHER GUNS OR CANNOLI’S.

Forecast for the Week

So if you love all the excitement, drama, intrigue and crazy volatility of late…you’ll love the week ahead, as it is loaded full with market movers. We’ll get the latest readings on the health of the manufacturing and housing sectors, but the main event will take place on Tuesday when the Federal Reserve announces its latest interest rate decision and Policy Statement.

The Fed is expected to cut the Fed Funds Rate by another .75%. However, as we’ve seen following every Fed rate cut in the recent cycle, chances are very good that Bond pricing will worsen following the cut…which results in higher home loan rates. This happens because Fed rate cuts help to stimulate the economy, by making it less expensive to finance personal and business purchases…and this in turn fuels inflation, the arch-enemy of fixed return assets like Bonds, which home loan rates are based on.

So a word to the wise – if you or someone you know has been ready to move forward on a purchase or refinance, there’s no time like the present. Be sure to get in touch with me, so I can explain your options and help plan a great strategy for your home loan.

Chart: Fannie Mae 5.5% Mortgage Bond (Friday Mar 14, 2008)

The Mortgage Market View…

BUT DON’T EVER TAKE SIDES WITH ANYONE AGAINST THE FAMILY AGAIN…EVER

These lines spoken by Michael Corleone to his brother Fredo could very well apply to small family businesses, which are critical to the nation’s economy. In fact, according to the National Federation of Independent Businesses, more than 1.2 Million businesses across the country are owned and operated by spouses. While these thriving ventures in capitalism are great for the economy, they can cause a lot of stress on your family relationships. That’s why experts recommend you follow a few simple suggestions to keep the business–and your family life–running smooth!

Only Fools Rush In. Starting a family business is a huge commitment. Although it sounds romantic, it’s a lot of work to…well…make it work. Before you jump in, consider what type of business is truly right for you; how the business will impact your financial plans; and how you’ll still make sure you have time in your schedule to enjoy non-business related family time. Because, as The Don says, “a man who doesn’t spend time with his family can never be a real man”.

Put It In Writing. The first step to making your dream a reality is putting together a business plan. The Small Business Administration has a great website that can help you write your business plan. You’ll also need to apply for a business license, tax identification number, and even business loans. Again, you can find the most requested business documents on The Small Business Administration website.

Clarify Roles and Responsibilities. To help avoid frustrations and arguments in the future, make sure everyone agrees on who will be responsible for what. Give yourselves titles and draft job responsibilities…then make sure everyone is happy with their role, and that all of the important everyday duties are covered. Make sure you determine who will pay the bills, who will negotiate contracts, who’s in charge of the marketing plan, who does the hiring, and so on. You don’t want to risk overlooking something or arguing about it later.

Protect Yourself. More important than having Luca Brasi as your bodyguard is making sure you plan your finances and stock away plenty of money to hold you over, especially during the start up phase. Most experts recommend having three to six months worth of living expenses in savings, depending on whether one or two people in the family will be relying on the business as their main income. You’ll also want to meet with a financial planner to make sure your retirement and other financial plans stay on track – and if you need a referral to a great financial pro, just let me know.

Set Boundaries… and Stick to Them! It’s easy to let the business take over your family life. Little by little the business successes and setbacks slip into family conversations… it’s only natural. But don’t let them take over completely. To alleviate this problem, make sure you set up regular “business meetings” where you can talk about key issues and exchange ideas about the business. In addition, establish some off-limit times where you’ll devote yourselves to each other and your family life. After all, even family businesses need some time “away from the office.”

Starting a business with your spouse or family is an exciting time. The key is to harness that excitement while staying cool-headed enough to make smart personal and financial decisions. If you or someone you know needs help with these important details, please don’t hesitate to call. I’ll be happy to discuss your needs and put you in touch with other professionals that can help.

Fed cut 0.50%

This week has once again been volatile, but the good news is the Fed cut 0.50% on the Fed Funds and the Discount Rate. Although not directly tied to mortgage rates, these rates are tied to Prime and are also what the banks are charged by the Fed overnight. Mortgage rates are, however, continuing to trend down right now and with rates at 5.75% on a 30 year fixed at ZERO points, why isn’t it a good time to buy? Buyers are getting off the fence!

Mortgage bonds were trading higher this morning on the heels of a weak employment report that said non-farm payrolls fell by an estimated 17,000 jobs in January. This news is good for mortgage pricing.

Stocks are unchanged this morning and are being held down by the lower than expected jobs number–despite the fact that Microsoft Corp is making a bid to acquire the search engine giant Yahoo.

Attached is this week’s rate update. Make it a great day and a safe Super Bowl Weekend!

Another volatile week

Another volatile week is a head for our financial markets. There are several reports coming out in addition to the normally scheduled Fed meeting starting tomorrow. Mortgage backed securities are back up again this morning. This is good news for interest rates. As the market continues to change be sure I will be your reliable source of information.

News of the Fed Fund cut

This week has been more proof of the volatility of the market. Rates dipped earlier in the week and then bounced up with the news of the Fed Fund cut. However, they are only slightly higher than last week yet will continue to trend downward.

Many of you are getting information regarding declining market loan-to-values. I am continuing to do research on the policy changes and here’s the latest. If you are a borrower putting down 20% on a full documentation purchase and the maximum loan-to-value for the program is 95% you do not have to reduce the loan to value for the borrower by 5% it remains a 20% down payment. If you have any questions about current or future deals please contact me.

SOME INVESTORS HAVE NO DECLINING MARKET POLICY. It just depends on the bank and the borrower’s profile.

There is news that the conforming loan amount currently set at $417,000 will be temporarily increased to $750,000. See the article by clicking below.
http://www.latimes.com/business/la-fi-jumbo25jan25,1,2691497.story?ctrack=2&cset=true

Looking for Canadian financing? I’ve got the programs to get your home purchased fast.
I’m never too busy for any of your refinancing or purchase referrals! If you are interested in refinancing a loan now may be the time. Have a great weekend!

Countrywide and Bank of America

Well the rumors are true that Countrywide and Bank of America will soon be partners as Bank of America announced yesterday that they will by Countrywide for $4 billion. This comes as no surprise as Countrywide’s portfolio is reporting a delinquency rate over 7% up from 4%, and after letting nearly 11,000 employees go.

Mortgage back bonds are still getting better this week helping to rally mortgage pricing after news this week from Ben Bernake that the Fed will continue to cut rates. New fed target rate is 2.75 down from 4.25 today. The cuts will help Home Equity line interest rates tied to the Prime rate, credit cards, and other consumer driven interest rates. Stay tuned for more information.

8 Day Loan Close

This week the mortgage market proved to be volatile when we got news Tuesday about the Fed cut. With the Fed fund and discount rate cut by .25% this has pulled money out of bonds and into stocks this is driving mortgage pricing slightly higher today. Over the next week or two, rates should again stabilize and turn lower. Mortgage applications are at a two year high this week as refinancing has become a popular choice for many homeowners. If you have a friend or client interested in refinancing out of a pay-option ARM or Interest Only payments and wants a 30 year fixed mortgage I’d be happy to meet with them. I’m never too busy for any of your referrals! Have a great weekend!

-Sean La Rue

P.S. Need help getting a deal closed? This week I closed a loan in 8 days from loan application to funding! Call me to get your deals closed…