In today’s wired world of Internet news and social networking sites…don’t confuse data with insight.  Remember data is everywhere anyone can regurgitate economic report numbers.  Trusted insight and advice is a valued commodity; this is why realtors are confident in choosing to work with The Meredith Mortgage Team.   

The forecast for 2010 is challenging and realistic; the question is, where will home loan rates go during 2010 and why? Rates are going higher in 2010 because there will be more supply coming to the market in the first quarter, while the Fed’s purchases will be winding down, therefore we do not think that the low rates of 2009 will be seen again. There will be waves and cycles moving up and down – but the trend is clearly up for rates.    

Once the Fed’s Mortgage Backed Security buying program has expired at the end of March, it is likely that rates will edge higher still towards the summer.  Eventually, supply will decline as origination volume slows – and mortgage rates should stabilize.  But if there are hints that the Fed will be looking to hike rates, thus signaling the end of the carry trade, mortgage pricing will significantly worsen.  The range for rates during 2010 is wide, with the lower end just above 5% toward the very beginning of the year.  The upper end of the range could be as high as 6.5%, with rates being very volatile throughout.  It is typical to see prices worsen more rapidly than they improve…but 2010 will exaggerate that characteristic, with pricing losses coming far more quickly and sharply than pricing improvements.     

Overall, 2010 will look better than 2009.  But, good economic news can have favorable and unfavorable consequences, as it increases the risk of rising taxes and rates.  Many people won’t understand the relationship between rates and the economy – so make sure you use the changing economic climate – and your understanding of it – as a way to establish your expertise with clients.  

Use the impending Homebuyer Tax Credit deadline and the low rates in the first quarter of 2010 to move your buyers off the fence before they miss this opportunity!  Remember, rates are about 1% lower than they would be if Fed weren’t buying all those Mortgage Backed Securities.  On a 200K mortgage that would mean about $8,000 would be needed to buy your rate down 1%.  Of course, you also have to factor in the Homebuyer Tax Credit – which is $8,000 for new homebuyers or $6,500 for current homeowners who are moving up.  When you combine the 1% lower rate with the tax credit, you see that homebuyers stand to gain between $13,500 and $16,000 on a home in the mid-200K’s. That’s a big incentive for homebuyers to act now, while both incentives still exist.   

We are a direct lender not just a mortgage broker; as you know, many banks are insisting that your clients be pre-approved by a direct lender. Our team maintains a current pulse on the many nuances involved in the loan process, and should you and your clients find yourselves in one of those unexpected/inevitable glitches; we are proactive and we keep things from falling apart.  We always help to guide your clients toward their best interest; every step of the way we keep you and your clients informed and updated with the loan process. It is our commitment to not just close loans on time; rather to make it a fantastic experience for you and your clients, that’s why so many people choose to work with us!  

 

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