Rate Update

We have been counseling people now through this rate madness stating the following, "We expect rates to stay fairly constant for some time due to the economy. They will fluctuate up and down, but mostly average the same. Although we believe there is more pressure for rates to go down, we do not see that happening unless the government steps in and does something drastic to force them down."

Well, that is exactly what they did today. The Feds announced this afternoon that they will purchase 1.1 Trillion worth of securities to help stimulate the economy. This should, in all likelihood, drive rates down a fair amount. Although we have not seen the full effects of that yet, we will continue to monitor the overall affects constantly. If you have any questions about rates do not hesitate to call us at 830-9685.

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$15,000 Tax Credit?

Click the title to link. Do you think it would stimulate the economy if Congress passed a $15,000 tax credit for those who purchased a house this year? Well this is what was just added to the"stimulus" package. We certainly do not think it would hurt, and may indeed help the dismal housing market right now. But it has its doubters also.
By the way, for those of you who continue to hear 4% rates, everything we read and hear is that it would be only for those who are purchasing a house. Sorry refinancers.

Feds Should Keep Rates Low

Interesting stuff from the Feds today. They are making noise that they will keep rates low throughout the year. What is most interesting is the fact that they may be open to buying treasuries and mortgage back securities. If that happens, it should lower mortgage rates. This is a reason rates have been up a bit lately, because they are having a hard time finding buyers of these mortgage backed securities. Stay tuned.

Visit msnbc.com for Breaking News, World News, and News about the Economy

Fed's Drop Rate Again....alot

You're probably aware by now the Federal Reserve has voted unanimously to lower the overnight lending rate, or the federal funds rate, to .25%, it's lowest point since 1954.

The goal of the Fed's here is to stimulate the economy. How you ask? The idea is that consumers, particularly large consumers such as businesses, will begin to borrow and spend due to the cost of the borrowed funds being so cheap. Will it work - who the heck knows? Only time will tell. Our hunch is it's going to take more (such as the job loss bleeding to stop); but, we are still optimistic. Why not, right? Being pessimistic isn't going to do anyone any good.

BUT, for those of us with a home equity line of credit, this is a great thing. This means the prime rate will drop to 3.25%! Wow! And some of you may have a line of credit with terms at prime minus some %, so you could be looking at borrowing against the equity in your house at less than 3%. Truly amazing. Please though - remember that these rates could go up just as fast as they went down. So use these line's of credit wisely.

I'm sure the main question most of you have is: "will the mortgage rates go down as a result?". As of now, the answer still seems to be no. It appears the market for mortgage backed securities has hit somewhat of a bottom, putting rates in that 5.5% range. But one thing we've learned over the last few months is that the only certainty is volatility. Rest assured we are monitoring rates and will get the word out if they dropped as some have speculated.