Aloha Friday,
The rates this week have just been fantastic, holding the very low levels from last Friday. It’s incredible to see rates for conforming loans down at 4.125% and 5% for “high balance” loans.
These rates are truly amazing and deserve a moment to reflect how much this will benefit your borrowers:
If they take a Loan Amount at $400,000 with a 4.375% rate, it has a payment of $1,997 fixed for 30 years.
If the borrower waits and finally finds a property that is $20,000 lower in price and the same loan drops to $380,000, but the rates go back up to 4.875% (which we were at 3 weeks ago), the payment would actually go up to $2010.
This illustration shows us that it is imperative that borrowers try to take advantage of these extraordinarily low rates.
On another note, the government auctioned $12 billion in 30 year notes today which met with lackluster demand. Investors are looking at stocks again as the market is pushing toward 10,000 on the Dow Jones Industrial Average (closing at 9786 Thursday). Do you remember in March the Dow dipped all the way down to 6469? One year ago the Dow was at 8480. What a year, yes?? The rollercoaster is enough to make you nauseous. If you had $100,000 in the Dow Jones Industrial Average index fund a year ago it would have plunged to $64,690 in March and worth $115,000 today. Exciting yes? Do you like to gamble? The stock market is only legalized gambling seeded by educated decision making.
The last feature of this weeks email is a new trend we have seen from a few jumbo lenders. Recently we have experienced some jumbo loan servicers write their loan balances down to the maximum high balance conforming rate just to get the loan off their books. For example, Bear Stearns loans (now out of business and being “serviced” by another company) may have a mortgage on a property for $842,000. The maximum high balance limit in Los Angeles is $729,250. The servicer may be willing to write their loan off by $112,750 to get the rest of that principal back immediately and get the loan off their books. It does not happen in all cases, but is certainly a new thing we are seeing pop up for banks to create new capital on their balance sheet by writing off the mortgage debt. It is interesting to say the least. We can help to refinance those loans if that is something you or your client may have the opportunity of doing. The are called “short refinances”.
Enjoy the weekend and please let us know if we can help in any way. I will be checking messages all weekend.
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