Mortgage Rates are in FREEFALL!

Just time for a quick update - because this is news I think many of you are waiting to hear.

Mortgage rates are in freefall mode today. The stock market closed pretty flat today, very slightly in positive territory, but the bond market is being very kind to mortgages.

The yield on the 10 year bond is currently at 3.3% - down approximately 20 basis points from the close yesterday. Apparently our 10 year bond auction was very well received today.

The 30 year fixed rate mortgage has finally dropped below 5% again, for the first time in over 6 weeks. Adjustable rate mortgages are down in the mid 4% range, especially if your loan has already been approved and is ready to get docs out for signing. FHA loans are again in the low 5% range.

There is no way to know how long rates will remain this low. But, we'll take the good news anytime.

If you are one of those people who has been thinking this is a great time to buy, but you can't sell your current home, There has been one big change fairly recently that might help some of you.

Many lenders are now allowing you to offset the amount of the mortgage payment on your current house if:

1. You have 6 months reserves (PITI = principal, interest, taxes and insurance) in the bank that you can document for 60 days or more

2. You have at least a 1 year lease signed for your current house

3. You are allowed 75% of the lease payment amount to offset your current mortgage payment.

If all this is confusing, please call me. I'll be able to work if you qualify and for how much you can qualify. I know there are some of you out there looking to buy to take advantage of the low prices, but unable to sell your current homes.

Make it a great afternoon today.

Warm regards,


Shelby Bateson

Town & Country Mortgage

Portland, OR 97219

503-819-6545 phone

Lic # ML-3604

http://www.shelbytncmortgage.com


* Best rates apply to borrowers with Loan to Value at or below 90% and credit scores of 740+. ** Best FHA rates apply to credit scores of 660 and up. There are upward rate adjustments for lower credit scores on all loan programs. All rates are subject to change without notice. These rates are NOT APRs - do not include closing costs.

Good news Bad News in the Financial Markets and Mortgage Markets

The good news is that new job losses reported for May took a dramatic drop. The numbers came in at 345,000 jobs lost in May 2009. While under normal circumstances this would sound terrible, consider that in the past 6 months, that number was consistently above 600,000. BUT, nationally, unemployment now stands at 9.4%!

There's even more to make matters worse; CNBC reported this morning that the real unemployment figure is closer to 16%:

if you add in people who have settled for part time jobs, or just any job in order to feed themselves and their families, plus those who have run out of unemployment benefits.
Also, we have all those college grads coming into the market this month, with no jobs, and not added into the 9.4% or even the 16% numbers!

And,to make matters even more dismal on the employment front, the average work week is now down to 33 hours. There are currently 12,000,000 people out of work in the U.S.

There is a debate going on right now on CNBC about whether the worst is behind us. Those who say we are close to bottom cite the following:
The DOW is up 2000 points since we hit bottom in March
New firings are down by almost 50% for the month of May
Bond yields are rising.
So far, inflation is very moderate - gas prices are rising but no where close to the $4.00+ we saw just a year ago.

Those who say "the other shoe has yet to drop" are citing:

Housing values have not yet stabilized
Unemployment is still too high, and we need to see employment figures rise before we can call a bottom
Bond yields are rising, which is driving up the costs of borrowing - most specifically Mortgage rates are rising so fast, it's frightening - which will not help our housing market
Retail sales still remain dismal, unless you are Walmart.
What do you think? Are you an optimist or a pessimist?

The yield on the 10 year bond rose again today. It topped out over 3.9% this morning, and closed the day at 3.84%. I hate to say it, but of course, mortgage rates rose yet again today. The average rate on 30 year fixed rate loans, as of today is above 5.5%! As we have discussed before, this is eating into buying power in a major way. For each $100,000 increment of a mortgage loan, the payment increases $62/month when the rate goes from 4.625% (where we were 2 weeks ago) to 5.625% (where we are today).

HARP loans (perhaps better known to most of you as the Obama "Making Homes Affordable" loans, or the Fannie Mae/Freddie Mac streamline refinances) are still available. This program has been funding through June 2010. While the process is streamline and requires less documentation from you as borrowers, the rates are almost exactly the same as other prime loan rates for conforming loan amounts ($417,000 or less). Also, adjustments to the rate are exactly the same as for other prime loans. The big benefit to the HARP loans is that you can be underwater and still qualify for these mortgages without mortgage insurance (if you current loan does not require mortgage insurance.)

Currently, we are hearing that a few lenders are starting to accept applications for those of you WITH mortgage insurance, but the guidelines have not yet been announced. I am not accepting those applications at this point, because virtually all lenders require pre-paid appraisals with your applications, and if the terms are not favorable, you have spent up to $500 for an appraisal you don't want or need. I will keep you posted once we receive all the lending rates and guidelines for this product. We do know that NONE of the big banks (B of A, Wells Fargo, Chase, etc) are offering this program yet, so I suspect there is more to what this loan will entail than has been disclosed to us so far.

Shelby Bateson
Sr. Loan Officer
Town & Country Mortgage
http://www.shelbytncmortgage.com