Last week volatility continued as the Fed cut rates, corporate profits were down, bond insurers’ woes added to the sub-prime debacle and economic news continued to fuel investors’ and economists’ fears of a recession. A possible Microsoft-Yahoo deal has the markets down only slightly today and mortgage interest rates up slightly.
Not much economic news this week so expect to continue to hear about the sub-prime problems, corporate losses, and the bond insurers’ woes. It sells papers.
We think it will take at least a few weeks for the Fed cut to filter through the economy and see what its true effects will be. Mortgage bonds should remain in the same trading range this week as the past two weeks and interest rates as well.
As the housing slump continues due to excess inventory we see this as a positive buying opportunity for first time and repeat home-buyers. Also, we expect the conforming lending limit to increase regionally to better match the value of homes in different areas of the country. This could mean as much as a 1-2% reduction in interest rates for current loans above $417,000.
Last week The David M. Damare’ saved a client over $45,000 in interest on a $200,000 loan over 30 years.
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Stay tuned and stay in touch with your mortgage professional. Thank you for the opportunity to serve you and your clients. David. 919.851.0999