I am always amazed at consumers who listen to the media. When CNN reported mortgage rates were going to drop to 4.5%, it appeared the mortgage world stopped. Consumers no longer wanted their 5.25% interest rate they had locked into, CNN told them to wait. If anyone read the fine print of this latest plan from the government, you would have read in the Wall Street Journal ( a real news source for the economy) these mortgages were going to be set aside for purchase money only and it is only a plan, not even on paper yet.
Mortgage rates had dropped a full percent in the last few weeks due to large amounts of money pumped into the Mortgage Back Securities markets. This did work and we saw rates of 4.875% for an afternoon. Then, back to reality. The economy, which actually governs the markets took over. In addition to the economy, large mortgage companies like GMAC, Wells, Citi just a name a few have artificially raised their rates to slow down the mortgage application volume. You see, we can only handle so many mortgages, then if you are one of those tire kickers and just want to chat about the markets, you will get a call back next week. With all of this, mortgage rates backed off, a lot. From 4.875% Tuesday up to 5.375% in a matter of minutes. But why would believe someone who has been doing this for over 15 years, the CNN news person just learned who Ben Bernanke is and now is an expert on the markets.
I am sure we will see rates drop back down, but to try to time the market perfectly and get the lowest rate, nearly impossible. History tells us the markets react like a roller coaster, once we see an all time low interest rate, it is bound to spike back up. I admit, we are in new territory with this economy. If you are in the process of refinancing your home and you are going to save an estimated $150 per month, do you think it is wise to hold out for a possible rate drop of a 1/4 or 3/8ths just to save another 30 or 40 bucks. You may miss it all together and not even get a chance to refinance at all. Stop the greed, it is what gets most of us in trouble.
If you have any questions or comments, please feel free to e-mail me anytime at bill@billnickerson.com. I can share the many tools we use to watch mortgage rates and we are typically a full day ahead of the news media when it comes to the direction of mortgage rates. If you are getting your economic news from the evening news you are even further behind the curve.
Be careful what you wish for, if you really want to save money, cut back on your Starbucks or Dunkin Donuts coffee. That's $100 per month for the average person. Again, I am always amazed at the consumer of what they think and how they can predict the markets.
Good Luck and I wish you the best with timing the markets. Hopefully you not one of those who lost 30 to 40% in the stock market because you knew better then the rest of us.
Just another day in Mortgage Paradise!
Bill Nickerson
Vice President
Mortgage Netword
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