This Week’s Mortage Rates and Information

Rates for the Week Ending February 27th, 2009*   30 Yr Fixed Conforming:     5.500%     APR 5.570% 5 Yr ARM Conforming:       4.625%     APR 4.698%  30 Yr Fixed Jumbo:          8.000%     APR  8.070%  5 Yr ARM Jumbo:             5.250%     APR  5.370%    Prime Rate is at 3.250%   Mortgage News   Mortgage markets worsened last week, taking interest rates with them.    A steady drip of sour economic news plus concerns about the banking system out muscled Fed Chairman Ben Bernanke’s congressional testimony in which he said the recession would likely end later this year.   Overall, mortgage rates have risen in 9 of the last 12 trading days.  This week, it’s unclear in what direction mortgage rates will go. However, it won’t be because of a lack of action.  The week starts with the 8:30 A.M. ET release of the Personal Spending report, a closely-monitored report that should make a broad market impact.  Economists expect that spending increased in February, providing key support for economy.   If economists are wrong, though, and spending fell, it will cast doubt on the speed at which an economic recovery will occur. Consumer spending, after all, makes up two-thirds of the economy. No spending means no recovery.  Next, on Wednesday, the White House is expected to release the details of the Homeowner Affordability and Stability Plan.  Again, markets are watching for the broader impact of the news.  If analysts and traders deem the plan effective, watch for stock markets to improve and bond markets to weaken.   This would cause mortgage rates to rise.  Then, Friday, we’ll get to see February’s official jobs number. Job loss is expected to exceed 600,000 for the month and unemployment may reach 8 percent.  On many levels, if the jobs data meets the expectations, it would be okay with respect to mortgage rates.   As always, it’s recommended that you float your mortgage rate cautiously.  Wall Street is nervous for its turf and hyper-sensitive to Beltway influence.  Markets can change in an instant and when they do, they usually change for the worse.  This week, have a game plan. It’ll be easier to take advantage of daily mortgage rate movement. Remember to contact Kelly Karls and Wendy Johnson @ kjpremier@atproperties.com if you are thinking of buying or selling in the near future.       *Rate Assumptions: These rates are posted for informational purposes only. They are meant to provide a gauge of where the market was at in the previous week and are not necessarily reflective of where rates are at currently. The rates were based on a 30 day rate lock. Conforming loan rates covered loans below $417,000 and above $300,000. Rates for loans below $300,000 may have been higher. Jumbo loan rates covered loans equal to or greater than $417,000 and below $650,000. Rates for loans above $650,000 may have been higher. These rates had assumed standard lender fees of $995 and no points. APR is not shown because this is not an advertisement but an article on the state of rates at the end of this week.

Information Courtesy of: Guaranteed Rate

What does all this mean anyway?!

Well, the house voted down the bailout bill yesterday.  I’ll be honest, I had to do some further research to understand myself a little better what this means for me and you.  From what I can tell, this is good news.  We obviously need something to happen, but we don’t want the government to buy all of these bad loans.  We want the investors, those who have the money to burn, and who are liquid, to buy up these bad loans.  For them, this means that when the market rebounds, they will have bought distressed properties at an extremely low price, and be doing very well once prices surge upwards again.  In turn, it will relieve the lending institutions of the bad loans that it’s been having to bare.

We want the government to INSURE these loans, not bail them out.  If the government assumes them, then this will trickle down to the taxpayers, aka, me and you.  We merely want the government to insure them, thus giving the lending institutions more confidence to start lending again.  Let the banks that are in trouble get bought out by those that are thriving. 

I realized that I had explained this several times on the phone today to friends, family, and clients, and thought that others out there might be confused too.  Hang on, the government will get its act together and put together a plan that makes sense, and will hopefully enable the economy to rebound after a tough Monday.  Don’t watch too much of the news, it will only depress you.  Besides, the city of Chicago is on a roll, we’re hoping for a Cubs/Sox World series.  Now that would be a shot in the arm for our city’s economy.

For more questions or help in wading through the puddles of all this talk, contact us at kjpremier@atproperties.com.