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As you've heard me say many times over the past few months, we expect that the Federal Reserve's exit from the Mortgage Backed Securities (MBS) purchase program may cause some volatility in mortgage rates. They will be finished with this purchase program at the end of March. If your clients are currently in contract, they can protect themselves from this possible volatility by locking in their rate now.

Although there will be a period of uncertainty with rates initially, we believe that the long term outlook is favorable and that mortgage rates will remain low for awhile. There are many large investors who have short positions in MBS and will be eager to buy on any type of under performance resulting from the Federal Reserve's exit (if the MBS fall in price, these investors can buy them for less than he or she sold them; making a profit). We believe these money managers will have an incentive to continue the purchasing of mortgage backed securities which creates demand and therefore should keep rates low.

This is good news for a strong purchase money market in 2010. And, with new jumbo lenders coming back into the market and interest rates behaving I am excited about the opportunities that exist for all of us in the months to come.

Now, on to the rates we've been seeing:

· 30 year conforming 4.75% 1 pt.

· 30 year high balance 5.125% 1 pt.

· 30 year FHA 4.75% 1 pt.

· 30 Yr. FHA high balance 4.75% 1 pt.

· 5 year jumbo 4.25% 1 pt.

· 7 year jumbo 4.875% 1 pt.

· 10 year jumbo 5.25% 1 pt.

· 30 year jumbo 5.50% 1 pt.

Regards,
Tracie

Tracie Southerland

Financial Advisor & Mortgage Advisor
Email · Biography
650.319.1603
License 01190919

Opes Advisors

Exclusively for

Sereno Group

Current Indices*
Dow Jones: 10,444.14
Nasdaq: 2,292.31
10 Yr. Bond: 3.60%
1 Yr. T-Bill: .35%
1 Yr. LIBOR: .83938%
MTA Index: .441%
Prime Rate 3.25%

*Indices as of close of business Thursday.

www.opesadvisors.com

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Welcome to C.A.R.’s Market Matters, your weekly market response guide.

Click here to view “Beyond the Headlines,” a version specifically formatted for consumers that you can print, share via e-mail, or post on your Web site.

The Los Angeles Times

IRS issues new guidelines on obtaining home buyer tax credits
The Internal Revenue Service (IRS) recently issued new guidelines and clarified documentation that taxpayers must submit to successfully obtain the federal tax credit for home buyers.

MAKING SENSE OF THE STORY FOR CONSUMERS

The federal tax credit for home buyers was extended and expanded late last year. Qualified first-time buyers may be eligible to receive a tax credit of up to $8,000 on homes purchased before April 30, 2010. Repeat buyers may be eligible for a tax credit of up to $6,500. Click here for more information about the federal tax credit for home buyers, including eligibility requirements.
To receive the tax credit, home buyers must comply with the IRS’s documentation requirements, including a fully executed IRS Form 5405. On the form, which is available on the IRS’s Web site, taxpayers provide information supporting their claim of eligibility, such as income and home purchase date.
The IRS also requires home buyers to submit a copy of the closing or settlement statement that proves the transaction took place. The IRS previously said that the statement should show “all parties’ names and signatures, property address, sales price, and date of purchase.” However, since closing or settlement statements vary by state, and in some cases the form does not include both the seller’s and buyer’s signatures, the IRS has revised this requirement. As long as the closing or settlement statement conforms to prevailing local practices, the IRS will accept it.
One stipulation for repeat buyers is they must provide documentation they lived in their former property for a consecutive five years out of the previous eight years. Accepted documentation may include property tax records, hazard insurance records, or copies of annual mortgage interest statements filed with their federal taxes.

To read the full story, please click here.

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In Other News...

CNN Money

Housing help for unemployed, underwater borrowers
Under pressure to do more for troubled homeowners, President Obama is expected to announce a $1.5 billion program to help borrowers in five states hit hardest by the housing crisis.

To read the full story, please click here.

The Los Angeles Times

High-end home sellers lower their sights
The housing slump is finally bringing down prices in the luxury property market.

To read the full story, please click here.

The San Francisco Chronicle

More using program to prevent foreclosure
The number of mortgages with permanently lowered monthly payments under the Obama administration’s foreclosure prevention program increased dramatically in January.

To read the full story, please click here.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Bloomberg News

High-scoring borrowers pay cards ahead of mortgages
Consumers with high credit scores are more likely to default on mortgages than credit-card loans, said FICO, maker of the scoring formula most widely used by U.S. lenders.

To read the full story, please click here.

The Los Angeles Times

Jumbo mortgage market is beginning to thaw
The mortgage meltdown sent interest rates soaring and availability shrinking, but rates are declining and lenders are more wiling to make loans that top the limits for Freddie Mac, Fannie Mae, and the FHA.

To read the full story, please click here.

The Sacramento Bee

Struggling homeowners warned against phony foreclosure ‘audits’
State officials warned struggling homeowners Monday about a new variation on loan-modification scams: “forensic loan audits.”

To read the full story, please click here.

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Talking Points:

When beginning the house hunt, some buyers go in blindly, not knowing how much house they can afford. Without this knowledge, buyers may find themselves viewing houses that aren’t within their budget. To prevent buyers from spending time viewing homes they may not be able to afford, real estate experts advise home buyers get pre-approved by lenders before house hunting. By providing copies of a recent credit report, W-2s, pay stubs, and bank and brokerage statements to a lender, buyers will have a better idea of the price range they can afford.

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Below are the rates we've been seeing this week:

· 30 year conforming 4.75% 1 pt.

· 30 year high balance 5.125% 1 pt.

· 30 year FHA 4.75% 1 pt.

· 30 Yr. FHA high balance 4.75% 1 pt.

· 5 year jumbo 4.25% 1 pt.

· 7 year jumbo 4.875% 1 pt.

· 10 year jumbo 5.25% 1 pt.

· 30 year jumbo 5.625% 1 pt.

Regards,
Tracie

Tracie Southerland

Financial Advisor & Mortgage Advisor
Email · Biography
650.319.1603
License 01190919

Exclusively for

Sereno Group

Current Indices*
Dow Jones: 10,321.03
Nasdaq: 2,234.22
10 Yr. Bond: 3.63%
1 Yr. T-Bill: .35%
1 Yr. LIBOR: .84625%
MTA Index: .463%
Prime Rate 3.25%

*Indices as of close of business Thursday.

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Yesterday the Fed raised the discount rate by .25% (The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility). Last week the Fed did indicate that the move might be coming, yet the timing of their announcement was surprising to many.

As you might recall, at the start of the mortgage meltdown, mortgage lenders were having difficulty securing warehouse lines to allow them to provide mortgage funding. Lenders did have the option to access the Discount Window at the Fed (Federal Reserve Banks offer three discount window programs to depository institutions: primary credit, secondary credit, and seasonal credit, each with its own interest rate. All discount window loans are fully secured.) However, because costs for these funds were high AND repayment had to be done within 28 days, most lenders were unable to utilize this option.

As a result, the Fed held an emergency meeting, lowered the Discount Rate and extended the repayment period to 90 days. These changes made the Discount Window option a viable solution for lenders and helped curtail the severity of the mortgage meltdown.

Yesterday's announcement reverses those emergency measures. Yet, as long as warehouse lines remain functional, this announcement should not adversely affect mortgage lending.

When making this change yesterday, the Fed noted that the continual improvement in financial market conditions gave them the foundation for this move. The Fed also said that they do not anticipate this raise to lead to tighter financial conditions for households or businesses nor does this move indicate any change in their outlook for the economy or for monetary policy.

However, as the Fed makes changes, the government backs out of Mortgage Backed Securities (MBS) purchases and slows down stimulus programs, we continue to assess economic growth and inflation concerns.

One of the most popular measures of inflation within the U.S. is the Consumer Price Index (CPI). The CPI measures the estimated average price of consumer goods and services purchased by households. This index rose by 0.2% for January, less than the 0.3% expected. With the publishing of the January results, the year-over-year CPI is at 2.6%, below expectations of 2.8%. The more closely watched Core CPI (which strips out food and energy costs), actually fell by 0.1%, below expectations of a 0.1% rise. The last time Core CPI showed a negative monthly reading was 28 years ago. This helped to drop the year-over-year Core CPI rate to 1.6%, a bit below expectations of a 1.8% rise.

These results show that, for the time being, inflation is a non issue. However, it will likely become a factor in the next year or two. And, the best hedge for inflation is to fix as many costs at today's prices as you can. A home purchase today with a historically low mortgage rate allows buyers to fix the price of their home and the associated financing costs. We will continue to keep an eye on this index and other economic indicators.

And, as always, below are the rates we've been seeing this week:

· 30 year conforming 4.75% 1 pt.

· 30 year high balance 5.125% 1 pt.

· 30 year FHA 4.75% 1 pt.

· 30 Yr. FHA high balance 4.75% 1 pt.

· 5 year jumbo 4.50% 1 pt.

· 7 year jumbo 5.00% 1 pt.

· 10 year jumbo 5.375% 1 pt.

· 30 year jumbo 5.75% 1 pt.

Tracie Southerland

Financial Advisor & Mortgage Advisor
Email · Biography
650.319.1603
License 01190919

Opes Advisors

Exclusively for

Sereno Group

Current Indices*
Dow Jones: 10,392.90
Nasdaq: 2,241.71
10 Yr. Bond: 3.8%
1 Yr. T-Bill: .35%
1 Yr. LIBOR: .84625%
MTA Index: .463%
Prime Rate 3.25%

*Indices as of close of business Thursday.

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Because so many people are going away for the long weekend I've decided to keep this message short and get right to the rates we've been seeing this week:

· 30 year conforming 4.75% 1 pt.

· 30 year high balance 5.00% 1 pt.

· 30 year FHA 4.75% 1 pt.

· 30 Yr. FHA high balance 4.75% 1 pt.

· 5 year jumbo 4.375% 1 pt.

· 7 year jumbo 5.00% 1 pt.

· 10 year jumbo 5.375% 1 pt.

· 30 year jumbo 5.75% 1 pt.

Tracie Southerland

Financial Advisor & Mortgage Advisor
Email · Biography
650.319.1603
License 01190919

Opes Advisors

Exclusively for

Sereno Group

Current Indices*
Dow Jones: 10,144.19
Nasdaq: 2,177.41
10 Yr. Bond: 3.72%
1 Yr. T-Bill: .35%
1 Yr. LIBOR: .84625%
MTA Index: .463%
Prime Rate 3.25%

*Indices as of close of business Thursday.

www.opesadvisors.com

(0) Comments

Reader Comments

Add your comments

Please keep your comments relevant to this blog entry. Email addresses are never displayed, but they are required to confirm your comments.