Mortgage Rates Down, Applications Up

This morning's CNBC Bonds Report provided confirmation backing up a suspicion we've been harboring. Although our forecast has been that over the long term mortgage rates would increase, its likely we are now experiencing a drop preceding an upside reversal.

The US' Federal Reserve Chairman, Ben Bernanke, has been trying to reset the wheels of credit, while driving down mortgage rates to prompt buyers to jump back into the housing markets. So far most efforts to set a floor in housing have failed.

However, in the last few weeks, as the Fed has pumped liquidity into the system, and many of the swaps and other financial "assets" were cleared by the ISDA* bond markets have finally responded, thereby pushing mortgage rates down. *Throughout Sept and Oct the International Swaps and Derivatives Association cleared the qualified financial contracts of Lehman, WaMu, Freddie Mac, Fannie Mae and other collapsed firms with derivative financial products, credit default swaps, and other contracts on their books.

This certainly does not mean our nation's economic problems are over. But, it does offer the brightest ray of hope we've seen in months! In the short term we believe mortgage rates will fall even further from today's low of 5.25%, 30 year fixed. Although it's really tough to call markets, Bill Gross of Pimco (a funds manager) essentially agreed this morning. Gross anticipates mortgage rates will fall as much as one full basis point below the current rate. We'd feel more comfortable projecting at least another half point, conservatively.

Last week mortgage applications nearly doubled according to the Mortgage Bankers Association. With rates falling and applications rising, a nice short-term trend is now being set in place. If you are a home buyer, you may want to wait before locking in your rate. If you are a home owner, it may be time to review your existing mortgage terms and consider calling your favorite loan officer to run some numbers.

Unfortunately, at this point we are unsure if falling mortgage rates will last longer than two or three months. But we are hopeful that at least one positive housing related trend, albeit temporary, is finally developing.



Stacey Barrington is a licensed Broker in the State of South Carolina. This information is not guaranteed or warranted, and in no way constitutes investment advice. All personal investments should first be reviewed by a qualified mortgage lender, tax advisor, legal consultant, and/or the attorney of your choice.

Controversial Political Toy

Online shopping for Christmas has its hazards.

Aside from the easy persuasion to overspend (as credit card sits temptingly next to computer console) one can expose themselves to lots of things they might rather not know exist.

Take for instance, this dumba%$* toy, which is a fine example of a collosal waste of energy spent toward its production. The Path CRA 911 Super Fun Childs Toy appears to be made in China, with French (don't speak French; not positive on this one) instructions, and according to the internets, is sold in Morocco. It is a near unrecognizable plastic President Bush figure, sitting atop a tank, chasing Osama Bin Laden on a circular train track.

Someone in the world is making mucho dinero by reducing an historic and tragic event to a plasticized, oil-based prop. Sad. It might be that time of year to reflect, yet again, on the stupid crap we buy all around the world.

- photo credits to fun-blog.biz

Thanksgiving Thoughts

Here in America it's Turkey Day. Nearly everyone will either be playing or watching football and fighting the sleepy effects of the tryptophan naturally found in their every bite of gobbler. Since laziness will rule the day it's appropriate to share thoughts of thanks prior to partaking in these gluttonously fulfilling festivities.

What a year it's been. Volatile? Yes. But that's what happens when a massive shift is underway in the world. Global power is being traded, our financial systems are in complete overhaul under the weight of a collapse fueled by greed, and governments are being challenged in ways they didn't quite expect just ten years ago. In Thailand the people are protesting (hope none of you were trying to get in or out of Bankock today as airports are closed). In India an organized terror attack was carried out yesterday. And in the US so many people are going broke, food banks were having trouble filling turkey orders (some serving chicken).

Although events like these are worrisome, there is still so much to be thankful for. Shifting and progression are natural. Life is nothing more than change. All structures are temporary.

It's certain some of what we will go through in order to come out on the other side of these challenges will suck. Yes, even we have lost money in various markets this year. But we'll pull it together. In fact, we'll all just have to pull it together. The good thing about challenge, whether it's a family issue or a global restructurization, is that it causes people to think deeper; think bigger. Deeper reflection will help guide the way. For this, there is a great deal of thanks to be given. Have a wonderful thanksgiving, everybody.