Fed Rate Cut Almost Certain – Day 3

Comments made over the previous two days by Fed Officials have fanned the flames on Wall Street and various news reporting agencies about the likelihood of a Fed rate cut on December 11th .  While I reported yesterday about Bernanke’s take of a possible reduction, further comments he made after hours yesterday added even more fuel to the speculation.

Below is a recap of today’s most important financial news affecting the markets, including mortgage rates, along with a link to today’s article in Bloomberg about stocks where Bloomberg specifically sited comments the Chairman made after trading closed yesterday.

I hope that you find both useful in your quest for current and provocative information on the subject that so many of us in the lending industry are closely following.  It appears to be safe to say that mortgage rates will be heading down further with other indices.

Again, here is today’s recap as of 2:00 P.M.m EST along with the link to Bloomberg:

The Core PCE, or Personal Consumption Expenditure minus energy and food, came in at 1.9% for the Year over Year. This finding falls within the Fed’s target rate of 1-2%. Coupled with the speech presented last night by fed Chairman Ben Bernanke, there is little doubt that there will be a Fed rate cut come December 11th. The only question now is whether it will be .250% or .500%.

Commerce Department data showed US consumer spending increased by a smaller-than-expected 0.2 per cent in October while personal income rose at a 0.2 per cent annual rate.

Economists had predicted a 0.3 per cent rise in spending and 0.4 per cent increase in personal income…so this is more data to support the economic slowdown.

In his speech late yesterday, placed the central bank on a path towards a December rate cut as he said the relapse in financial markets had resulted in a “tightening in financial conditions” that had the potential to harm the real economy.

The Fed chairman also said recent data on household spending had been “on the soft side” and warned that the combination of higher fuel prices, the weak housing market, tighter credit conditions and declines in stock prices seem likely to create some headwinds for the consumer in the months ahead. He concluded that the central bank would have to be “exceptionally alert and flexible.”

Interest rate futures are fully priced for a cut in the Federal funds rate to 4.25%, with a 30% chance of 50-basis point cut when the Fed meets next month.

Some important things to keep in mind are this – the Fed strips out the energy and food components from the PCE. However, the rising costs of food and energy are straining the US Dollar. When the Fed reduces interest rates on the 11th, this will put more inflationary pressure on the Dollar, and cause Bonds (and yes, Mortgage Bonds) to see lower yields. The same thing happened last month when the Fed eased rates by an unexpected 50 basis points. Once the initial reaction is over, mortgage rates should drop even further than they are now.

Link to Bloomberg citing Bernanke’s decisive comment:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEfHm6gN00bM&refer=worldwide

 

In California, for mortgage information please refer to my link below as well:

 

http://ocmortgagefinder.com/index.htm

Fed Rate Cut- More Fuel Added Towards Rate Reduction

Written November 29th 

For those interested and following the possible movement of the Fed’s next potential rate cut at the upcoming December 11th, meeting, today’s news proved interesting.  A follow-up to yesterdays speech by Fed Vice Chairman Kohn, Fed Chairman Ben S. Bernanke today added more fuel to the fire that the Fed’s only choice may be to lower rates.

After his speech, Wall Street Traders and economists alike are further parring bets that the upcoming meeting will bring another cut in rates, maybe as much as 0.50 pts. overall.

Then to cap it off, President Bush’s economic advisers downgraded their outlook today for overall economic expansion for next year.

One thing is certain, sentiment is brewing that with the overall economy showing several signs of weakness, the Fed may have no choice other than to reduce rates.

We hope you find this information useful in your daily search for business and financial research and data. 

If you are in California, and considering cashing in on the lower mortgage rates which are partially a result of all of this news, look me up at my link below.  For detailed information regarding Bernanke’s comments today, also visit the following link to Bloomberg.

http://ocmortgagefinder.com/index.htm

 http://www.bloomberg.com/apps/news?pid=20601087&sid=aqhkXcuFSwpQ&refer=worldwide

 

Federal Reserve Vice Chairman’s Comments Hint Lower Rates Ahead for U.S. Markets

November 28th

Federal Reserve Vice Chairman Donald Kohn made comments today saying that market “turbulence” may reduce credit to businesses and consumers, reinforcing investors’ expectations the central bank will cut interest rates again next month.

Kohn further said, “The degree of deterioration that has happened over the last couple of weeks is not something that I personally anticipated,” Kohn made this comment in response to a question following a speech to the Council on Foreign Relations in New York. “We are going to have to take a look at” the stress in credit markets “when we meet in a couple of weeks,” he said.

So, what is Kohn and the Fed really up to these days?  Kohn’s comments are a contrast from what the Federal Open Market Committee’s October 31st statement which was reiterated by the Fed’s Chairman Ben S. Bernanke a week later, that risks between growth and inflation were ” roughly” balanced.

Adding to that, Chris Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi in New York felt Kohn’s statements were paramount to a yes vote for a rate cut on December 11th when the Fed meets next, according to Wall Street sources.

 At this point, it’s really anyones guess as to what may happen at the next Fed meeting.  Depending on what paper, internet site, or blog that one may read one thing is certain….everyone has their own idea of what’s going to happen, and so far it’s a mixed bag.

From this writer’s prospective from what I see in the real estate finance trenches, the market overall has come to a complete crawl.  Combine that with the upcoming Holiday season, signs are ripe that the Fed may have no choice but to further lower rates again.  Then again, that’s just my guess.  After 37 years in the business, nothing surprises me anymore.

One thing is for certain, interest rates on mortgages are at some of the low’s seen only since 2004.  Maybe if the news gets out, people may realize that refinancing out of “Exotic” loans just might be looking like a good idea at this point provided they still have enough equity left after the free-fall values have taken over the last few months over the Sub-Prime debacle.

Fannie Mae / Freddie Mac Mortgage Limits Announcement

It’s Official !  The Office of Federal Housing Enterprise Oversight ( OFHEO )  announced just moments ago that the Conforming Limits for Fannie Mae and Freddie Mac Mortgages as previously rumored by many in the industry to increase will remain unchanged for 2008.

This means that the current limit of $ 417,000 for Conforming Loans remains unchanged, excluding properties in Alaska, Hawaii, Guam & U.S. Virgin Islands.

For your information, the limits remain as listed below:

$ 417,000 for mortgages on One-Family Properties ( SFR,Condo, & PUD )

$ 533,850 for mortgages on Two-Family Properties ( Duplex )

$ 645,300 for mortgages on Three-Family Properties ( Triplex )

$ 801, 950 for mortgages on Four-Family Properties ( Fourplex )

I am sure that this will disappoint many here in California who were anticipating an increase in these limits to help offset the rise in home values over the last few years.  Many were hoping that this potential increase would help those in Jumbo Mortgages above $ 417,000 to refinance into lower rates associated with Conforming Loans.

If this information has been helpful to you and you are looking for mortgage assistance in California, please visit me at http://ocmortgagefinder.com or you may call me for questions and answers toll free at 1-800-720-2279.

 Happy Holidays

Mortgage Rates Tumble / Bonds at 2004 Lows

Mortgage rates over the last few weeks have improved just modestly even though Treasuries have been making solid improvements.  Everyone, at least everyone that I know in the business, is remarking why rates have Not fallen further.

Then today, the first day after the Thanksgiving Holiday, the Bond Market lost it’s Floor and Bonds have reached their Lowest Level since March of 2004.

 So what does this mean for the average consumer?  Well, in my opinion Only, I think the market is Finally realizing that things really Aren’t So Rosy.  It also might just be a Great time for those sitting on the fence to refinance or puchase to finally take the plunge.  Now I know that some may come back throwing bricks saying that I am just trying to drum up business, but hear me out.  After-all, I have been doing this for more than 37 + years.

I’ve seen cycles before.  If I’ve learned one thing, it’s Never take things for granted that they will always be like this.  What do I mean?  Simply this……..Strike while the Iron is Hot!  It can Always change on a dime and go the Other way.   One thing I know for sure is that the traders on Wall Street Normally Always Make Money……….and they do so BY Manipulating the Market.  Lastly, in my business, I always seem to see the market improve and by the time I’ve seemed to spread the word….someone or something in the market sends it the Other Way.

So in this writers opinion, do Both of the following if you are Considering Buying or Refinancing:

1.  Contact a Competent and Ethical Lender of Your Choice.  Run the numbers to see if doing any of this makes any logical sense for You.  If you are in California, call me for a Free Analysis- Or if you think I’m just blowing hot air- CALL someone else of Your Choice, but Call Someone.  Like I said, things don’t always remain the same.

2.  If you are Happy with the rate you are given and can Live with the payment- Lock It !  I always tell people this when I meet or talk with them.  Just remember what I said…if you can Live with It-Lock It.  There is a saying… Bears make money…Bulls make money…and Pigs get Slaughtered.   People always say to me, well if the market is going down maybe I should wait and lock it later- I always tell them that’s fine, but don’t Complain to me if the Market Turns on a Dime and goes the Other Way leaving you with that sick feeling as to why you Never Locked in the first place.

Two final things…… if I have helped you in any way and you need assistance….look me up at http://ocmortgagefinder.com And Tell a Friend…we Live by Referrals.

Lastly, if you think I am full of you know what……check out this link in today’s Bloomberg….it may open your Eyes as to the Validity in what I am saying.  http://www.bloomberg.com/apps/news?pid=20602007&sid=agS59UEbFUlo&refer=rates

Best Regards and Happy Holidays

HR 3915- Follow-Up to Mortgage Reform Bill

House Approves Major Mortgage Reform Bill

This short synopsis is a follow-up of my post last week on Congress’s move to curb what they term as Predatory Lending Practices.  These paragraphs summarize key points of the Bill.

On Thursday, November 15, the House of Representatives approved H.R. 3915, the “Mortgage Reform and Anti-Predatory Lending Act of 2007,” by a vote of 291-127. If enacted, this legislation would fundamentally change mortgage practices in several areas: establish a federal duty of care in offering mortgage products; require licensing of all mortgage originators; prohibit steering; create an ability to repay standard: lower HOEPA triggers; attach limited liability to secondary market securitizers; and require an escrow account for some first-lien mortgages in certain circumstances. Prior to floor action, the Mortgage Bankers Association sent a letter to the House Leadership expressing serious concerns with this bill.

While the bill is intended to improve several areas of the mortgage market,    H.R. 3915 will greatly limit the availability of credit and will prevent many qualified Americans from becoming homeowners. On Wednesday, November 14, the Bush Administration issued its Statement of Administration Policy. Although the Administration supported several key goals of H.R. 3915, it believed this legislation would restrict credit for potential homebuyers and limit refinancing options for current homeowners. Action now moves to the Senate where Banking Committee Chairman Christopher Dodd (D-CT) is preparing to introduce his own reform package.If you desire any further information regarding this Bill, please go to www.namb.org to search for more information.

If you are in California and looking for mortgage assistance, please feel free to call me Toll Free at  1-800-720-2279 or visit my website at http://ocmortgagefinder.com/index.htm  

HR 3915 Congress Proposal May Be to Your Detriment

Maybe you’ve heard about all the Hoopla going on in Congress about Preditory Lending over the last couple of weeks.  The Financial Service’s Committee passed this Bill onto the Full House this week for further debate and potential edit.

One feature of the Bill which quite frankly was designed to help the consumer, may in fact, cause more harm than good.  Specifically, one aspect of the Bill calls for disallowing the financing of closing costs when a borrower wants or needs to refinance their home.

Say for example that you are seeking a new mortgage in the amount of $ 250,000 with say $ 4,000.00 in closing costs ( Remember this is an example).  A section of this Bill would prohibit any financing of closing costs by the client or lender.  End result, client needs to bring in $ 4,000.00 out of pocket to close the refinance.

Now I certainly am one that favors looking out for the consumer with respect to competitive rates and fees, but this one aspect of the Bill is beyond my scope.  Rather than helping the borrower, in many cases this part of the Legislation will create more undue hardship than what I believe was originally intended.

 Then again, we are dealing with Politicians here.  For more information regarding this Bill, go to www.NAMB.org.  If you disagree with some or any of the findings on this Bill, let your Congressman know your thoughts about this Bill.