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End of Week Interest Rate Review 
There was some choppiness in the mortgage market this week, but not much overall movement.

The Conventional 30 year fixed rate remained the same at 4.375%. This rate would be available for a borrower who has excellent credit (credit score of 740 or greater) and could be obtained with little or no points if you make the right size of down payment.

The Conventional 15 year fixed rate remained at 3.375%, assuming the same parameters as mentioned above.

SHOULD I LOCK OR FLOAT?
It is relatively safe to float your rate today, but there is still some risk involved. If you are not risk averse, you could choose to float your rate. If you are more conservative, then lock it in. Take the money and run.

[ add comment ] ( 4683 views )   |  permalink  |   ( 3 / 1846 )
$13 Billion is Still a Lot of Money 
A few weeks ago I wrote about JPMorgan Chase, the country's biggest bank, agreeing to a $13 Billion settlement with the Federal Government over selling shoddy mortgagesto investors during the real estate boom. It is expected that the agreement will be signed today.

I find a number of things interesting here, but mainly the distribution of the funds. $4 Billion will go to the Department of Housing and Urban Development (HUD). All well and good, but last week JPMC reached a $5.1 Billion settlement with the Federal Housing Finance Authority (FHFA), $4 Billion of which is part of today's $13 Billion, so instead of the $9.1 Billion JPMC may claim they paid, it is truly only $5.1 Billion. They are being allowed to use $1.5 Billion to write down loan values so they can forgive some borrower debt. Roughly $500 Million (a mere pittance?) would go to lowering borrower's monthly payments, while the remaining $7 Billion would go to various other measures, such as providing low-to-moderate income loans. Is this really now considered a penalty?

There are still 9 other investigations pending, apparently including private litigation over $100 Billion in Mortgage-Backed Securities (MBS). It is rumored that they have set aside $23 Billion as a hedge against any additional losses.

As I write these figures, I'm amazed at how large they are and how ordinary they have become. $1 Billion. It makes me think of Dr. Evil, from the Austin Powers movie, when he says "$1 Million". $1 Billion doesn't even seem like a lot anymore, unless it's yours.

[ add comment ]   |  permalink  |   ( 3 / 1833 )
Interest Rates End Week Slightly Improved 
We saw some positive signs this week that last Friday's Job's Report was overblown, enabling rates to hold firm or even drop slighlty on the shorter amoritzations. The Conventional 30 year fixed rate remained the same at 4.375%. This rate would be available for a borrower who has excellent credit (credit score of 740 or greater) and could be obtained with little or no points if you make the right size of down payment.

The Conventional 15 year fixed rate dropped slightly to 3.375%, assuming the same parameters as mentioned above.

SHOULD I LOCK OR FLOAT?
Market conditions are less volatile than at the end of last week. It is safer to float your rate today than it was last Friday, but there is still some risk involved. If you are not risk averse, then go ahead and float your rate. If you are more conservative, then lock it in.

[ add comment ]   |  permalink  |   ( 3 / 1911 )
Rates Jolted Upward by Jobs Report 
Boy was there was some upward pressure on interest rates today. There wasn't any good news when it came to rates, with the Conventional 30 year fixed rate rising to 4.375%. This rate would be available for a borrower who has excellent credit (credit score of 740 or greater) and could be obtained with little or no points if you make the right size of down payment.

The Conventional 15 year fixed rate rose to 3.50%, assuming the same parameters as mentioned above.

SHOULD I LOCK OR FLOAT?
Market conditions are reasonably volatile at the moment, but we may see things calm down somewhat next week. Monday is a Federal holiday, so the markets are closed. Once all of the data from the Jos Report is disected, we may see some improvement in rates. I don't know if it's really safe to float at the moment, but we may have seen the wrost of it today. If you have a strong stomach, then assume the rate risk and float your rate. If you are somwhat more conservative, then lock it in.

[ add comment ]   |  permalink  |   ( 3 / 1900 )
Friday's October Non-Farm Payroll Should be Weak 
Friday morning we get to see how many non-farm job's were created in the month of October. Remember The Shutdown? Wasn't nearly as great a show as Rmember The Titans (great movie with Denzel Washington), was it? Most mortgage market experts believe The Shutdown will cause the Non-Farm Payroll figure to be around 130,000. If the number is close to 130K, then mortgage interest rates should remain at their current levels. A figure around 120,000 should cause the mortgage market to rally and rates to drop. Anything at 140,000 and above will likely cause a sell-off in the mortgage market and rates will increase.

My guesstimate is a headline number at or below 130,000. I just do not see much job creation, especially during the first half of October during The Shutdown. Private businesses were at risk of closing due to lost revenue because there were so many Federal employees that could not spend money they didn't have.

Now, what will happen to the Unemployment rate? Consensus is a rate of 7.2%. I have continued to be a critic of the method of calculation that is used to determine the number. If we are only counting the people that are receiving benefits, how can the number be accurate? What about the thousands of people that no longer receive benefits? Aren't they still unemployed? Shouldn't they be included in the unemployement rate?

[ add comment ]   |  permalink  |   ( 3 / 1772 )

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