This is good news!

MARKET UPDATE

Two great pieces of news came out this week.
1) Conforming Jumbo loans are now available on 2 unit properties. Depending on the median home prices in your local market, a buyer could be eligible for up to $934,200 at a great rate (this is up from the $533,850 for conventional conforming 2 unit loans). Awesome!
2) Owning and renting have now become comparable in cost in many hard hit areas of California like Vallejo, Fairfield, and Sacramento. This has brought out lots of first time home buyers and investors who can do the math and see what deals are available when this phenomenon occurs in California. This is further indication that we may be at or near the bottom of the current downturn in some markets. (Even some newspapers are starting to get this.)

Interest Rates on the Rise!

What a week in the mortgage market! Fears of inflation hammered long term rates. Fed board members are out fanning the fears of inflation. Oil and gas prices are at record highs.

So naturally, rates on 15 and 30 year fixed rate mortgages have started to rise. In fact, they jumped ½% or more this week alone. It was one of the worst weeks for mortgage rates in the past 20 years. Ouch!

But don't despair. There are options. Some have moved to 5 year ARMs in order to hold the line on rates. Others are considering Temporary Buydowns. And you know what? 30 year fixed rates on conforming and conforming jumbo loans are still in the mid sixes. Not bad from a historical perspective.

JUMBO RATES FALLING- GREAT NEWS!

JUMBO RATES FALLING- GREAT NEWS!
Just a quick bulletin to inform you of some fabulous news.
The interest rates on the newly coined "Conforming Jumbo Loans" (from $417,001 to as high as $729,750) have plummeted, and are now a mere ¼ % higher than standard conforming loan rates. (By contrast last week they were nearly a full percentage point higher.) This adds great buying power for your clients in this price range!
Moreover, Freddie Mac has announced that they will be buying more Conforming Jumbo Loans, adding further liquidity to this market.
And in further good news, rates for standard jumbo loans (those above $729,750 in San Francisco- lower in lower median home price areas) have dropped also.
At the risk of being overly optimistic, it appears that the tide is beginning to shift. We're starting to see buyers come out and buy in the hardest hit areas. This is causing lenders to believe that we may finally be at or near the bottom of the pricing cycle. Keep your fingers crossed! Next thing you know, they might even start easing up a bit on underwriting!

News & Notes on the Notoriously Unpredictable Market

Signs of possible stability coming back into the financial and mortgage markets have appeared once again this week. To what do we owe the positive news? Frankly, your guess is as good as mine, as trying to predict what will happen from day to day has become an exercise in futility!.
However, I do try to seek out the variables which seem to have the most impact on our rates, our housing markets and our economy. Here are a few items that seem to indicate that things are looking a bit better this week.

· The aftermath of the FED bailing out Bear Stearns via lending Chase Morgan nearly $30 billion to buy the troubled investment house led to panic. Then, just as we were all getting comfortable with the panic and the seemingly second coming of the Great Depression; news arrives that Lehman Brothers Holdings actually raised $1 Billion more in liquidity than predicted-in one night! What does this mean? It means that investors are still investing in financial institutions- good news!

· Over the course of the last few days, mortgage rates have stabilized as well. The gap in interest rates between the new conforming jumbo loans, and conventional loans is narrowing. Better pricing is a great indication of stabilization.

· The talk of overhauling our financial regulations hit a peak in the media yesterday, insinuating that this reform was imminent. Good news prevails though, as this reform will not take place immediately, so the chances of an over correction are reduced.

· Finally, stocks have rallied a bit of late. This is leading many to think that we may have seen the worst of the credit crunch. Now if the economy will just cooperate!

While none of these items alone are enough to say (with any degree of certainty) that the real estate and mortgage markets will improve soon, together they paint a slightly sunnier outlook than we've been seeing of late.

Stay tuned!