The Mortgage Man

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Archive for July, 2008

Stock Rally Puts Pressure On Mortgage Bonds

Stocks are rallying today sending mortgage bonds lower.

Crude Oil traded below a significant support level around $121 per barrel today, and that triggered bullish sentiments on the stock market.  In addition, Consumer Confidence for June was reported today at 51.9 slightly above the 50.0 that was predicted.  This is not a significant move upward, but it is the first move upward since December.  With oil down and confidence up, traders are pulling money out of bonds and putting it into stocks, and this as you know is not good for mortgage rates.

If you have a loan file in processing currently, I recommend locking your rate on continued volatility in the markets.


Buy A Home For The Price Of A Used Car?

While many home owners suffer across the country, the current market is creating unprecedented buying opportunities.

It is no secret that every story has two sides.  You are pummeled in the media on a daily basis with the stories of doom and gloom about today’s housing market, and its affect on home owners nationwide.  What you may not have heard about is the flip side of the coin which is the buying opportunities that are being created.

Throughout the last century, more millionaires have been created through real estate than all other business combined, and right now there is a clearance sale going on that could change your financial future.  That may sound a little sales pitchy, but it is true.  Those who position themselves correctly today will be poised for financial independence tomorrow.  Those who listen to the mainstream media can sit back 2 years from now and talk about what they could have done but didn’t.

As reported on Good Morning America this morning, in Detroit, Michigan there are currently 1745 homes on the market for less than $10,000.  That’s not a misprint.  When you can buy a home for less than you would spend on a decent used car, there is a tremendous opportunity to create wealth and income.  It is not just Detroit though, there are amazing buying opportunities all over the country right now, and if you are even considering buying a home, now may be the time.

Here are some free resources where you can find distressed properties nationwide.  (some are free trials, but still worth visiting) (click on Investors) (this one is general property listings, but they have an extensive database nationwide) (over 600,000 active foreclosure listings nationwide) (free foreclosure search nationwide)

Foreclosures Up….Again

Nationwide foreclosure statistics continue to rise.

According to RealtyTrac, the number of foreclosures nationwide are up 14% over last month and over 121% over the same period last year.  For the 2nd quarter of 2008 there were more than 740,000 foreclosures filed nationwide.  That equates to more than 8000 foreclosure filings per day.

While this is a frightening statistic, there is a light at the end of the tunnel.  As we continue to see the bulk of foreclosures move through the system, a bottom in the housing market is eminent.  Some estimates claim that we will see a bottom before the end of the year.  For some areas of the country, the bottom has already come and gone.

This long term outlook is good for just about everyone except potential buyers.  Those who wait for a bottom before buying may very well lose any gains through the monthly payment as mortgage rates have now risen to the highest level in almost a year.  Over the last 9 months, we have seen the best buying opportunities available in decades, and those opportunities are going to become more scarce as we get closer to a bottom.

For those sellers still experiencing pain with their home, check out  There you can find resources to help sell your home through a short sale and avoid foreclosure with the help of a nationwide database of investors, and help finding a local professional to get the job done.

A Good Day For The Mortgage Market

Bad news for Stocks means good news for Bonds.

After several days of the bond market getting severely pummelled, they are making a comeback today on some pretty nasty economic news.  First, jobless claims jumped to 406,000 last week.  This is much worse than expected, and the highest rate since March 2008.  Additionally, existing home sales were down, and inventory for existing homes was up.  Both of these combine to show that the economy and the housing market has yet to hit bottom (although I still believe that we are close).

On the stock market, Ford Motor Co. reported a loss of nearly $9 billion for the 2nd quarter.  This combined with a major bullish run on stocks over the last week has led investors taking profits and putting them over into bonds.  At the time of this post, mortgage bonds are up 34 basis points on the day.  They have moved decisively through one level of upside resistance, and are currently holding at a 2nd level of resistance.

This will help to recover some of the recent losses, but it may still be a good time to lock based on continued volitility in the markets before closing.

Mortgage Bonds Trading Lower On Inflationary Pressure

Mortgage bonds are feeling more pressure today on the heels of comments by the Philadelphia Fed President.

Philadelphia Fed President Charlie Plosser stated today that “inflation is too high”.  Of course whenever the word “inflation” enters into the markets, bond traders sell.  He also added that the Fed must “back up their words with action”.  This is a clear indication that rate hikes in the near future are eminent, and the market seems to agree.

To re-cap – oil prices are based on the US Dollar.  With the lagging value of the dollar being at least one of the prevailing reasons for high prices, one way to help is to increase the value of the dollar.  Increasing the Fed Funds Rate and making money more difficult to borrow is a proven way to strengthen the dollar, and the trickle down affect could very likely lower the price of oil.

Of course, the flip side to this coin is the already struggling credit market where people have had difficulty already in borrowing money with rates where they are now.  While the short term solution may be to shore up the value of the dollar, the long term solution will be to lower our dependence on foreign oil.

For more on our dependance on foreign oil and how we may be able to change it, see my post on The Pickens Plan.

Wachovia Mortgage Curtain Call

Wachovia Corp announces the closing of its …

Wachovia Corp announced today that not only did it cut shareholder dividends by 87%, but it will cease all wholesale mortgage lending.  This does not mean that they are going the way of IndyMac Bank, but it does mean that they are scaling back on their mortgage operations to include retail mortgage origination only.

Many mortgage lenders are moving to a more localized mortgage lending approach in an effort to shore up liquidity and keep the shareholders from running for the hills.  Wachovia mortgage is one of the largest regional banks in the country, and some say they are ripe for a buyout by a large national bank.  This is yet to be seen, but scaling back their risk in the market would certainly be a way to improve their value to potential buyers.

Stocks Will Fuel Mortgage Rates This Week

Stock rallies continue to put pressure on mortgage bonds.

Last week, the bond market looked like it had been in an old fashioned street…..and lost.  The record recovery in stocks had the opposite affect on bonds as they sold off by the droves.  With bonds currently trading near 1 year lows, mortgage rates are likely to continue to have pressure this week.

There is no significant economic news expected out this week.  It is, however, a busy week for corporate earnings reports.  These earnings reports will determine the direction of the stock market, and in turn will determine the direction of bonds.

Because we have had such a major sell off recently, i recommend floating your mortgage rate until we see what will happen with corporate earnings throughout the week.