Good News! As some of you know from talking with me in the past week, I’ve been saying for some time that the Fed rate cuts have not helped mortgage rates… and that the only thing that will help rates is stabilization of the secondary mortgage market. As I’ve said, the best thing the Fed could do to help the situation is to buy the secondary market mortgage backed securities itself. Well on Tuesday this is exactly what the Fed announced it plans to do. The Fed is going to buy $200 billion in mortgage securities… not just those backed by Fannie Mae et al, but also those pesky jumbo loans that have had few interested secondary market investors for months. Could the credit freeze be seeing a spring thaw around the corner?

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Wall Street responded with a huge rally Tuesday… and the market closed with the DOW up more than 416 points, a truly spectacular bounce when one considers that it lost over 400 points in just the last week. While the rally may not last, it is an indicator of renewed investor enthusiasm over today’s move by the Fed. Treasury bonds experienced a sell off, but some of this money may flow into MBS (mortgage backed securities) as investors feel renewed confidence in the yields these bonds will produce. Remember… inflation hurts long term investments like 10-30 year bonds, so if the Fed does not cut rates again at its meeting next week this may also help curb the inflation trends we are seeing, improving mortgage rates even more.

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More good news! Lenders are moving quickly to get the higher limit conforming loans priced and released into the market. Marin, and the greater Bay Area qualify for these loans with limits to $729,750… so expect to see more buyer interest in the coming months if rates remain reasonable.

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What does this mean for you? If you plan to refinance or buy, then you might get a great rate with one of the new conforming loans if you’re content with getting either a 30 year fixed rate, 5/1 ARM, or interest only 5/1 ARM. Stated income and investor property loans are being hit with the highest rates so move quickly if you’d like one of these. My advice is, “if you like it then lock it!”. We may see rates improve in the next few weeks… so stay tuned for more updates and give me a call for daily rates.” 

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Prepared by:

AVATARA” RESIDENTIAL & COMMERCIAL REAL ESTATE FINANCE

Ana Trueman

Senior Finance Consultant

415.706.6711

www.avataraloans.com

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ana@avataraloans.com“