Washington Mortgage Planner-straight up mortgage advice and commentary

Good morning! I just finished reading the Seattle Times online (www.seattletimes.com) about J.C. Penney announcing  reduced  earnings forecasts for the first quarter of 2008. What followed were a series of short interviews with people around the nation about the state of our economy. Most of them said that they were cutting back. Yes, there's still a huge air of uncertainty out there about where our economy is headed. Probably quite a bit of it is psychological in that unemployment is still fairly low (4.9% at last count) and wages are not declining.  Some of the data is real though such as higher gas and food costs.

We've been luckier than most here in the beautiful Northwest but the real estate market is still awfully slow. I haven't done any purchase transactions this year with realtors and the few clients who were interested in buying decided to rent for now. That's in spite of the fact it's a buyers market with low interest rates and high inventory. One of my friends who is an experienced loan originator has gone from a high of 120 transactions/year to 60.  And they're the top producer in their office. So the signs are all around us that the market and the economy are slowing.

My question to you is how long do you think this slowdown will last? Generally, an economic downturn lasts 15-18 months. Which begs the question when did this all start? In Seattle, business was much slower in 2007 and ground to a standstill starting the end of last summer. That would make the case for a rebound starting near the end of this year or the first part of 2009. I've seen some pundits claim that the housing market won't start correcting until 2010.

There have been a number of positive measures taken by the Federal Reserve or by private companies (think Bank of America's proposed merger with Countrywide and Chase's proposed buyout of Bear Stearns) to right the ship. But I still see lenders tightening the belt. In other words, it's going to take some time to rebound. Most of the time these days, I have to inform borrowers that I can't help them given market conditions.

I personally believe that a correction will start next year. And it will be nice to have. In my business, we've endured hit after hit. I realize it was necessary and that there needed to be some weeding out. Those of us that are in it for the long haul will survive. It would just be nice to bear the fruits of our labors once again. Right now it's very tough. As always, I welcome your thoughts. What do you see out there? How are you coping? Let me know. And have an awesome day! There is always a silver lining!

Paul

Hello everyone: I was thinking this evening on my way home that mortgage rates, in my opinion, will continue to fluctuate wildly for the foreseeable future. Currently, I'm seeing a 30 year fixed mortgage at 5.625% O.A.C. It may even go to 5.75 or 5.875% by tomorrow. Last week, rates were as low as 5.375%. Why the fluctuation? It all has to do with the stock market. If stocks are battered, typically people are pulling their money out and investing in safer vehicles such as bonds. This typically causes mortgage rates to be low. Today, the announcement that Chase was upping it's offer on buying out Bear Stearns (a giant investment bank that would have failed otherwise) from $2/share to $10/share buoyed the stock market at the expense of mortgage rates. I expect the trend of fluctuating markets to continue as they attempt to find their footing.

We all wish it were otherwise. The market is tough enough as it is right now. Eventually, I see us reaching more stable ground. But it may not be until the second half of this year or the start of 2009. In the meantime, I'm advising all my clients to listen to their mortgage professionals about when to lock in a rate. It's too tough to predict precisely when rates will be ideal to refinance or buy. Consumers: If you have any doubts at all, heed those and lock in the rate today. I've seen too many cases where people gamble and then walk away with nothing. The only thing that leads to is frustration and disappointment. The opportunity is now. And the smart, savvy buyers are taking full advantage.

I recently attended a seminar by Brian Buffini (www.buffiniandcompany.com) and they talked about this being the best buyer's market in the last 15-18 years. It truly is the perfect storm because prices are moderating and interest rates are low. But as the economy starts to heat up again, it will be a seller's market. That will probably mean higher prices, less selection, and potentially more expensive money.

Good luck to everyone out there. I personally know people who are doing great in a challenging market because they adjusted accordingly. Besides, we all welcome the competition if it's with another true professional! Have a great night!

Paul

Hello all: I'm betting that tomorrow the Federal Reserve will cut the benchmark lending rate by 3/4%. Some are thinking more (as much as 1/1/4%) but I'm sticking to my guns. It's still pretty amazing that the Fed. has cut rates so far so fast. Obviously, they're really worried about the strength of the economy. They should be. With Bear Stearns (one of the largest investment banks in the world) set to go belly up if Chase hadn't swooped in and offered $2/share for them, it's obvious how severe the credit crunch really is. Bear Stearns was a huge buyer of bundled loans which is the whole reason why we're in this mess.

The good news is that mortgage interest rates are down again due to stock market volatility. This morning, I hurriedly called all my clients who had pending loans and told them I was locking their rate. The last time I tried to float a rate, rates went up. I think it's time now to lock as the market will continue it's wild swings. If you're a consumer, choose a mortgage professional who can advise you about the best way to go. If you're thinking about waiting, wait at your own risk. This is the time to be safe and not try and gamble that things will improve.

What are your thoughts regarding what the Fed. will do tomorrow? These are interesting and almost unprecedented times. Have a great day!

Paul

Good morning: As I sit here writing this, I'm battling a bad head cold. I don't know about you, but I tend to get a little short when not feeling well. On top of that, the mortgage market has just been plain screwy lately. Between the volatility of the stock market and my lenders changing their programs every day, it's enough to drive a person insane sometimes!

The one thing I was thinking about last night is the importance of keeping on. Yesterday, I had 0 loans in my pipeline. I just had the belief that things would turn for the better if I just kept plugging. Of course, out of the blue I received two phone calls from clients who want to refinance. On top of that, there are a myriad of other loans that will come to fruition over the next couple of months.

So the lesson is to keep going even when things seem at their bleakest and, oh by the way, you also feel like crap! I've been reading Michael Port's book "Book Yourself Solid" (www.michaelport.com) and listening to Brian Tracy's audio CD "Eat that Frog" to stay mentally sharp. One thing that definitely keeps me going is my love for this business. I feel like I've died and gone to heaven.

In sum, keep pushing. We're in a tough, challenging business that at times seems impossible these days.  But there's always a silver lining.  Our challenge is to find it!  Have a great day.

Paul

I was thinking today about our topsy-turvy world recently regarding mortgage rates. Today took the cake! I counted three separate times that I received emails from lenders announcing rate changes for the worse. I'm glad I was out of the office until mid-afternoon today.  I don't know about you but I can't keep up with it all. And I've decided I'm really not a rate guy. Yes, I know I need to be competitive but I'm going to draw the line at a certain point.

In other words, I'll play the game a little bit. Personally, I'd prefer to provide value and service over a lifetime.  I'm not looking for the one-hit-wonder client. I'm looking for the customer who appreciates my extra effort and knowledge in putting them in the correct loan for their particular situation. I was listening to a CD by Brian Buffini today (www.buffiniandcompany.com) and he asked the rhetorical question about Nordstrom vs. KMart. I don't know about you but I'd rather be Nordstrom who goes the extra mile to satisfy their customer. It's all about memorable experiences. In the end, very few of our customers remember what rate they actually got on their loan. What they do remember is how smooth the loan process was and how well they were treated.

I believe we should all build our businesses on top notch customer care.  It's great that our clients want the absolute rock-bottom rates and fees. If you're a consumer this is obviously in your best interest. Just be careful what you wish for. Realize also that we should be paid for our time and expertise.  I don't know about you but I refuse to budge on this!  Have a great day!

Paul