Washington Mortgage Planner-straight up mortgage advice and commentary

I am thinking because of all the bad news we have been getting that they will go to 1 pt. That would stem the tide of bad press from Bear Sterns....maybe.

Unfortunately, mortgage rates have not fallen all that much. If rates would drop to the mid- 4's, then the housing market would pop back up -- in my opinion.

There is another report coming out this afternoon with more banks are are in the same boat as Bear Sterns.  I'm thinking it's a great time to short the DOW!!!

Cheers-

Mike

Thanks, Michael. And the hits they just keep on coming!

Stephen: I'm not sure we'll see the 4's anytime soon on fixed rate mortgages. Perhaps on ARM's. they may become sexy again.

Thanks for your thoughts, Team DiMuria. A 1 point rate cut would be huge but entirely possible. Have a great day!

 

Paul

I will be very interested if the 30 year adjusts further.  As far as the Fed short term...I am betting 3/4 to 1 point reduction.

Inflation is about to go through the roof, but the Fed seems less worried about that than a recession -- so I'm betting a point. Buy hard assets now.

Thanks, Ann. Buying hard assets is an interesting idea. Perhaps people should also look at stock as I would bet a lot of these are off more than 15% this year.

Sam: I'm not sure the 30 year will come down too much more. We're thinking maybe to 5.375% tomorrow. Look for ARM's, however, to get more affordable (possibly into the 4's). Not to worry, though, about borrowers getting in trouble.  Those days are long gone due to the incredibly tight underwriting.  Have a nice night!

 

Paul

I think we will see the 4's  maybe this week   but until they realize it is not interest rates but credit policies that are stalling any kind of recovery ----   i think a 1.25% cut maybe on the horizon....   regardless, my finger is on the lock button....

I think locking is a good call right now, Lewis. It's in the best interest of our clients. Thanks for your thoughts!

 

Paul

hmmmmm if we can get our clients 1/2 better on the rate tomorrow -  wouldn't that be best interests?

That would be good. We'll see. I've had a tough time timing things recently. Thus, my locks.

1 pt would have a neutral effect at this point.

1.25% cut would send the Treasuries/bonds realing

.75% cut would burst kick the Bulls right in the nuts.

I'm predicting a 1.25% cut because Ben wants to act like a hero.

Rich: We'll see what happens. Your message would indicate you're not sure any rate cut would do good. Am I reading that correctly?

 

Paul

Hi Paul, we are in a position of "economic reality" that any correction will create another problem, the "whack a mole" illustration is perfect.  Bernacke has shown his hand by his actions over the past 6 months in cutting rates while ignoring the inflation dragon.  

Here is the fundemental issue...no matter how you slice it, the Fed controls the supply of money and has been in a "print more, print faster" posture.  The problem is not the "supply of money" but "confidence in our money;" more supply of less valued money does not create more liquidity...it actually stifles it because would be acquirers of dollar based debt are less likely to accept it at any promised yield.  That is of course, unless they have "money to burn." 

The only people that have money to burn are in the Middle East right now and I'll bet my last nickle that Cheney's visit over the past week had little to do with Opec increasing output, but twisting a right arm or two into buying our treasuries and mortgage backed securities.  There is no other explanation for the rally in the MBS market.

Uncle Ben's actions amount to re-arranging the chairs on the Titanic.

So, it's .75% cut, not much of a reaction one way or another in the DOW, MBS's didn't like the inflation language so they are selling off.  Cheney better burn some phone lines down talking to his Middle East buddies.

Thanks Rich. The Dow finished up over 400 points. I'll bet it's a temporary thing. I still believe things are very volatile right now and expect them to stay that way for the next few months. That's why I'm locking these days given the right opportunity. Take care.

 

Paul

Does cutting interest rates actually help? Or are they just furthering Stagflation?

Thanks, Nova. In the past, it has helped the economy out of a tight spot. Stagflation this time around is a major concern. Time will tell.

 

Paul