Good Afternoon All-
What a crazy month we
had. Sandy, Obama, "Cliff", it never ends.
We have seen our
rates, post Sandy, come down about .125%. Now the big debate we have going on
is the Fiscal Cliff. Be aware of what the outcome will be when we have clear direction
from our government. For example, if we go over the cliff, our interest rates
will get much lower. There will be job loss, and panic which will cause money
to flood the bond markets, raising prices of bonds, thus lowering interest
rates. If we strike a deal, which most likely we will, rates will move higher,
and the stock market will in turn rally. We have 31 days until this date so, as
usual, plan on everything going down to the wire as we know our politicians
will be going back and forth.
One item that it is
very important that you need to be aware of is that Fannie Mae and Freddie Mac
have just imposed some higher fees (guaranty fees) for purchasing loans.
This becomes effective December 1st. They have increased their fees 10 basis
points. What this means is all companies who sell loans to Fannie and Freddie
will be making 10 basis points less. After doing some research on this, it
appears that many of the larger banks have already anticipated this and have
preemptively planned for this. However, what we can gain from this is many of
the brokers and correspondent lenders will suffer. We might see their rates
increase a little bit to account for this which bodes well for us. As we know
all increases in goods are passed off to the consumer. In a multi-trillion
dollar mortgage industry, this increase will give fannie and freddie hundreds
of billions of more revenue.
The economic data we
have had released recently has been average at best. Inflation has been tame,
jobless claims are in-line, retail sales are so-so, GDP is hovering around 2%.
These are all signs of a sluggish and stagnant economy.
Our interest rates
will probably remain at this level for the upcoming months however we will get
a pop either way when a decision is made for the fiscal cliff.
Be aware of
your market, educate your clients and let's close some deals.
Josh
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