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<span style="font-family: Helvetica;"><strong><span style="color: rgb(255, 255, 0);">RATES</span></strong> are and have been bouncing inside a range from <span style="color: rgb(255, 255, 0);">3.75% to 4.875%</span> on conforming loan amounts ($417,000 or less) in a thirty-year fixed program, and from the low 3% range to the mid 4% range for 15 Year Fixed.</span></p>
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<span style="font-family: Helvetica;">For <strong><span style="color: rgb(255, 255, 0);">Jumbo</span></strong> loan amounts (above $417,000), the range is about a half percent higher than conforming. </span></p>
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<span style="font-family: Helvetica;">So, What’s the <span style="color: rgb(255, 255, 0);">Story on Rates</span>, Anyway? </span></p>
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<span style="font-family: Helvetica;">Most of our clients already have a good rate; "good" defined as being in the low 5% range, or lower. But with rates plumbing the 3% range in the last several weeks, I'll probe the question about refinancing for those whose rate is already pretty competitive, but who might be able to reduce their mortgage interest rate by at least an additional .5% (half of one percent).<span style=""><br />
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<span style="font-family: Helvetica;">As a general rule, loan balances that are on the small side (say, below $100,000) wont realize much of a gain in a refi that only lowers the rate about .5%. There's simply not enough of a reduction in interest paid to offset the expenses involved in a refi. The higher the loan balance, the more impact a small move in rate will have. Dropping from 4.875% to 4.375% on a balance of $400,000 reduces monthly interest expense by nearly $180, or about $10,800 over five years.<span style=""><br />
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<span style="font-family: Helvetica;">The flip side of this discussion is the cost; most refinance transactions have at a minimum about $2400 - $2800 in expenses related to appraisal, title, escrow, and government recording fees. So there are many who are right on the cusp of this kind of refi making financial sense and who might be waiting for the next dip in rates.</span></p>
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<span style="color: rgb(255, 255, 0);"><span style="font-family: Helvetica;">WHY RATES ARE LOW</span><br />
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<span style="font-family: Helvetica;">However, there are two things to consider; one is that rates are where they are because the global market place for fixed income investment sees no good alternative, for the moment. Europe is a mess, constantly hobbled by the potential for a disintegration of the EU like a divorce rooted in money problems, and struggling with debt issues that will take a long time to work through. </span></p>
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<span style="font-family: Helvetica;">And China, well, China is, at bottom, still a communist regime, practicing infanticide and human rights violations and intellectual oppression. Buyers of long rates might like the hotter rates offered on Chinese corporate and government bonds, but the idea of investing in a dictatorship still has a long way to go before it becomes palatable. That China regularly censors data, pirates and traffics in stolen intellectual property, and presents as fact data that is unverifiable and suspiciously rose-colored is all kind of a turn off for institutional investors.</span></p>
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<span style="font-family: Helvetica;">Other countries are just too small to handle the large amounts of investable cash the fixed income markets must put to work every quarter. Autralia's whole economy is only the equivalent of New York State's annual GDP. See the problem? Investors in bonds need deep, large markets to hide in, and right now, it seems, " the U.S. arguably is the cleanest dirty shirt in the world’s hamper" (Jonathan Burton, MarketWatch).</span></p>
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<span style="font-family: Helvetica;">So that leaves US treasuries and mortgage backed securities backed by the full faith and trust of the US government as the chief investment vehicle and benchmark against which alternatives are measured. The question is, how long will this continue? </span></p>
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<span style="color: rgb(255, 255, 0);"><span style="font-family: Helvetica;">SAFETY</span><br />
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<span style="font-family: Helvetica;">Rates are here in part because there is relative calm in the US Bond and mortgage "safe harbor" (compared to other, more stormy investment markets), but once the storm even begins to appear to be passing, money will leave the "safe haven" of US bonds (both government and mortgage-backed), and will flow out into whatever else is more attractive, and pays a better rate of return. </span></p>
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<span style="font-family: Helvetica;">So this is short lived, and if the global picture can actually improve, rates wont be here again, for a long, long time. Rates shouldn't be here at all, to be honest. I mean, can you imagine investing YOUR money, for 10 years, with a net real rate of return (after taxes, expenses and inflation) that is ZERO or near zero, or even negative? That's what buyers of US 10 Year Treasuries can expect right now.</span></p>
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<span style="font-family: Helvetica;">So this wont last, unless the appetite for safety remains stronger than the appetite for a better yield, one that actually matches or exceeds real inflation, which is currently running much hotter than the net returns on most long-term bonds.</span></p>
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<span style="color: rgb(255, 255, 0);"><span style="font-family: Helvetica;">HOME VALUES</span><br />
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<span style="font-family: Helvetica;">The other BIG concern I have is value...values keep eroding, and it may become IMPOSSIBLE for you to refi to a less expensive mortgage in the near future if values continue to slide. I know that this, too, shall pass, and that one day, we'll turn around and find home values are on their way back to their peaks of 2007. But that will likely happen when we are no longer watching.<span style=""> </span></span></p>
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<span style="font-family: Helvetica;">But for now, and especially if rates rise, values will remain under pressure. Banks have yet to take all the homes that are eligible for repossession through foreclosure, and banks have yet to even list for sale ALL the homes they already have in their REO (real estate owned) portfolio.</span></p>
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<span style="font-family: Helvetica;">If a home sells at $450k at 4.25%, that payment is likely $1,992 after 10% down payment. But if rates rise to just 5.25% (that was considered unbelievably low in 2000-2001, remember?), the sales price would have to fall to $400,000 to keep the same payment of $1990/month. Rising rates sap pricing power from would-be home sellers because buyers buy based on monthly payment, and rising rates increase monthly payment even while the home price remains the same.</span></p>
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<span style="color: rgb(255, 255, 0);"><span style="font-family: Helvetica;">BEST PRICING</span><br />
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<span style="font-family: Helvetica;">Our </span><span style="font-family: Helvetica;">DIRECT PRICING </span><span style="font-family: Helvetica;">from lenders participating in the NEW YORK LOAN EXCHANGE assures you that we are shopping among the <span style="color: rgb(255, 255, 0);">LOWEST RATES</span> the mortgage market can offer. In short, we price your loan with lenders from all over the nation, and many lenders, in and out of Wall Street, use exchanges or pricing engines to advertise their best rates. That's how we can be so sure that we are a leader in low rate offerings, while other institutions offer only what their particular bank has, and nothing better.</span></p>
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<span style="font-family: Helvetica;">Please take 120 seconds to find out how GOING DIRECT to the source and using pricing engines for a new mortgage rate will SAVE you more money on your mortgage payment than simply visiting a local retail bank.</span></p>
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<span style="font-family: Helvetica;">Click <span style="color: rgb(255, 255, 0);">APPLY ONLINE</span> now and in just two minutes tell us a few things about your desired mortgage, and in a New York minute we'll get to work preparing a FIRM QUOTE based on real-time mortgage rates from the exchanges. No more wondering if you are getting the lowest mortgage rate because that's all we offer!</span></p>
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<span style="font-family: Helvetica;">Jumbo Loans (the hardest of them all) are our specialty. Like training at altitude, doing big loans well makes all other loans easy for us. Jumbo really fell out of favor during the wipe-out, and is still a tough row to hoe, but for the right loans, it's more or less back. They still don't like doing Non-owner Occupied, but they CAN be done at reasonable rates.</span></p>
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<span style="font-family: Helvetica;">The easy loans for us are government loans (FHA, VA) and Conventional Fixed rate 30, 20 and 15 and 10 Year loans. These loans are no trouble for us, and rest assured your rate is the best offered on the New York Loan Exchange.</span></p>
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<span style="font-family: Helvetica;">We can even custom-design a loan term for you. Need a 9, 18 or 26 year term to make the payment just right? No problem, we can do that with no extra charge. Try getting that from a retail bank! The interest saved by shortening the loan term is the best kept secret in the mortgage business. Everyone is steered toward the 30 year, but if you can prioritize your spending to allow it, a 15 year term (or shorter) is the killer money saver over the term of the loan. Let us work up the numbers for you!</span></p>
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