Sarasota Mortgage Rates | The Mortgage Skinny

Well, we all know the economy is going through some issues, and being in the mortgage business we’re always hoping things will change.  The key to staying successful in this business is keeping a positive attitude and making yourself an expert.  You want to be the GO TO person when someone has a question about financing, and the reason why I’m saying this is because you need to learn about Foreign National lending.

Foreign Nationals are buying real estate over here in the U.S. for two reasons.  For one, their currency has an exchange rate that almost doubles the U.S. Dollar.  Right now the Euro is worth just over $1.50 and in the Pound is currently worth just under $2.00.  So for an English investor to come over here and purchase a $200,000 home, it really translates into them buying a $100,000.  Why wouldn’t a European come over here and buy a beautiful second home they can visit at anytime?  Their money is worth double the amount… if they want to go to Disney world and spend $100 on tickets, it really means they’re only spending 50 pounds.

Another reason why Foreign Nationals are coming over to the U.S. and buying real estate is because it’s a buyers market.  Homes that were selling two years ago for $400,000 are now listed for $250,000 and will most likely go for less than that.  This is the type of market where the old saying “The poor get poorer and the rich get richer” except this translates into countries.  Right now the U.S. is in a lot of debt and the government is trying to fix this but it’s not something they can do over night.  In the mean time other countries are coming over and buying property, businesses, etc. at a discount price and in turn will cash them in when the time comes for a higher profit.  It’s all relative. 

 Here’s the way I look at Foreign Nationals and the Mortgage Market:  Yes, I know home values are going down, and yes I know a lot of home owners are losing a lot of money, but the only good thing coming out of this is First Time Home Buyers, Investors and Foreign Nationals.  As long as they are buying up the market, it’s going to create transactions that fill the pockets of Real Estate Agents, Mortgage Brokers, Banks, Title Companies and this in turn will create more spending which will boost the economy.  Every little bit helps!

If you’re in the Real Estate world and wondering why it’s important to look at the Foreign National world, just know they’re going to continue to buy, and you might as well be a part of the transaction.  Now is the time for them to buy and they’re not even hesitating to stroke a check.  This is their market!

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In today’s tough market many banks are closing doors and others are struggling to survive.  The banks that decided to offer “specialized” financing are now wishing they hadn’t and for the banks that stayed on the straight and narrow are glad they did. 

The real estate world is going through what many would call a “Tough Time.”  Most people in the Real Estate profession  have either retired or found new jobs because the last year and a half home sales have dropped more than 40% in some parts of the Nation.  What has the government done to try and fix this?  Well the fed has tried numerous times over the past six months to stabilize rates by lowering the fed funds rate and create a turn in the market to get things back on track.  So far none of those attempts have worked because we’re still dealing with declining home prices and banks are still having a hard time lending money.

Just recently, the Fed started allowing big firms to temporarily borrow money from the Fed for emergency financing that only large banks had access to previously.  These actions have caused many to protest and raise concern because many believe the Fed is putting tax payers hard earned money at risk by simply bailing out Wall Street.  The Bush administration and Fed Officials state this is an action they needed to take to prevent an economic meltdown.  Analysts believe the way the first three months of this year have gone, we’re heading towards what many would call a recession.

Despite all the negatives associated with today’s market, there are a number of positives that we’ve noticed take place during this time.  For the people losing homes to banks and dropping prices on their homes, there’s always new purchasers out there looking for a good deal.  Now is the time for First Time Homebuyers to start buying their dream homes.  Two years ago a home that was going for $250,000 is now going for $150,000.  Despite what people may think, there are still a number of programs out there for First Time Homebuyers.  There’s been a large increase in local and state grants that are strictly for First Time Homebuyers that gives them a chance to own a home and afford it.

Another positive that has been a result of today’s tough market is lowered interest rates.  The Fed has desperately tried to stabilize this market and it hasn’t had much affect on the market so far, but one thing it has done is helped out home owners who have a Home Equity Line of Credit.  Two years ago the prime interest rate was somewhere around 8.25% but over the past year the Fed has dropped that rate and is currently at 5.25%.  This has saved many home owners hundreds of dollars which has created a little relief. 

It’s a tough market but if you can get through the “Tough Times,” just think about how nice the good times are going to be.  Also just remember, you’re not the only one going through “Tough Times,” the whole Nation is.

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If you’re thinking of buying a home, now might be the right time! Interest rates have fallen below 6.00% to start the year in 2008 which is below 2007’s national average of 6.44%.  Mortgage rates have always been known to fluctuate but it seems as though 2008 is starting out strong.

The unexpected and steady decline in rates could help cushion the home sales for 2008 by making mortgage payments more affordable.  With the decline in home values, now is the time for first time homebuyers to purchase.  With an interest rate of 6.00% and a home valued at $150,000, a monthly mortgage payment would cost $899 for Principle and Interest.  Most renters can afford this and can now have the opportunity to own and not ever have to deal with landlords again.

With interest rates as low as they are today, it’s also giving current home owners a chance to refinance out of their current situations.  Many Americans are dealing with fluctuating ARMs (Adjustable Rate Mortgages) that are coming due and it’s causing their monthly payments to increase which then causes many to forclose.  Lower interest rates could not have come at a better time especially with the estimate of $1.2 trillion in ARM loans scheduled to reset to higher rates this year.

Lower interest rates help the economy, it gives first time homebuyers the opportunity to own, it gives current home owners the opportunity to refinance into better situations, and all of this causes more spending in the economy.   My advice would be to call your Mortgage Consultant and ask to get an annual mortgage check up.  If you’re not currently satisfied with your situation, then now is the time to make some changes and save! 

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Here’s a quick excerpt that I found to be interesting. It always amazes me with the infinite amount of variables that affect the market and economy. Weakening factory orders may lead to lower rates. Lets take a closer and in depth look at this…

 Factory orders data is a monthly report released by the US Census Bureau. The realease is officially referred to as The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories, and Orders.

The manufacturing sector is a major component of the economy. Investors use the factory orders report to attempt to determine the direction of the economy in the future. Orders are generally believed to be a precursor to activity in the manufacturing sector because manufacturing typically has an order before considering an increase in production. Conversely, a decrease in orders eventually causes production to scale back; otherwise, the manufacturer accumulates inventories, which must be financed.

The stock market typically likes to see strong factory orders data indicating a surge in future production. On the other hand, bonds typically like weaker figures.

Despite some positive spots in the US economy, manufacturing continues to struggle. If the factory orders data shows a significant increase, stocks may rise on the data. This scenario is likely to pressure mortgage interest rates higher. However, a factory orders report showing continued weakness may help to push mortgage interest rates lower.

The next report for Factory Orders comes out on Wednesday, April 4th, 10:00am. Be sure to use the knowledge provided above to determine what the economy and interest rates are doing. Come back again for another weekly report on the economy. Also be sure to take a look at the employment report coming out on Friday as this will be the most important release nest week. If you see an increase in unemploymnet or a large decrease in payrolls you might be seeing lower rates!

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As a Mortgage Planner, it’s a necessity to have the essential knowledge of ”what’s going on” in the market place as well as the economy. I read many publications to keep me on track and I would like to share a few things to watch for the week of March 12, 2007. Unfortunately rates do not follow one indicator. There are too many economic events that effect where rates are going for both short and long term. The best we can do is follow what current economic indicators are doing and try to analyse what they’ve done historically and try to make an educated prediction from there. What a mouth full. So here is a quick blurb for the week.

Mortgage bond prices fell pushing rates higher last week. The beginning of the week saw bonds rally as former Fed Chairman Greenspan continued to weigh upon the financial markets. He was quoted as seeing a “one-third probability” of a US recession this year. The employment report last Friday erased the improvements when unemployment came in stronger than expected @ 4.5%.

For the week, interest rates on government and conventional loans rose by about 1/8 of a discount point. The consumer price index Friday will be the most important event this week. Retail sales, producer price index, industrial production, capacity utilization, and consumber sentiment data will also be important.

Why Data is Important
One of the easiest and most important things ito do when making a decision whether to float or lock a loan is knowing what data is going to be released. Economic releases are important because they provide a snapshot of a portion of the economy. In addition this is the last full week of data heading into the Fed Meeting March 21, so the market may be more volatile than usual.

I would like to see this website be an asset to you. From this point on I’ll try my best to give you a market update with the upcoming economic indicators and fed meetings etc, in hope that it will help to further educate you. So when the time to lock in an interest rate comes, you’ll know.

Source: Mortgage Market Information Services, Inc

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The Fed Chairman Bernanke delivered the Federal Reserve’s semiannual report on monetary policy to both the House and Senate Banking Committees yesterday. What was the outcome you ask? How does this affect me and why am I even reading this ever so boring post about what some chairman has to say?

Well I’m so glad you asked! The report given is one of the most important speeches for the Charmain. The areas addressed usually have to do with the overall state of the US economy, recent developments, economic fundamentals, foreign developments, economic outlook, ranges for growth, and concluding remarks. Wow that’s a mouth full!

Bernankes testimony indicated inflationary pressures were decreasing and economic growth was improving with an easing of the housing slump. Mortgage interest rates bounced favorably to Bernanke’s remarks before Congress in which he indicated, “So far, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing of core inflation.” This makes it possible for mortgage interest rates to remain low for the time being. Read the rest of this entry »

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