Well, if you thought offering money for less than 1/4% in an overnight fashion to American Lending Instatutions and spending $500 Billion to buy Mortgage Securities was all the Fed could “muster” in this economic crisis, then you would be wrong.  On Wednesday of this week, the Federal Reserve announced plans to add another $750 Billion for the purchase of Mortgage Securities to help keep Mortgage Rates down for an extended period of time…

There was still $250 Billion left of the original $500 Billion that was put in to action in early January.  Based on this figures, and the fact that the Fed plans to buy 4.5% and 5.0% Coupons, we should see rates stay right under 5% for at least the rest of the year.

Please don’t believe what you hear on TV about rates going to 4%.  It’s not possible now.  There will be no demand for 4% coupons when there is such a rediculous demand for 4.5’s and 5.0’s.  Rates won’t go much lower than they are right now if at all, but they will remain at these levels for at least 7 or 8 months and maybe even an entire year.

Of course, this additional printing of an enormous amount of money has crushed the dollar and will cause Crude Oil and ultimately Gas Prices to go much higher.  However, after a massive deflationary spiral, a little inflation is not such a bad thing.  Remember, inflation means your house goes up in value too…

Look at the chart ending last week.  Can you guess which day the fed made this announcement?

Now that the Fed is using $1 Trillion to buy mortgage securities, I think it’s time everyone realizes how much money that is…

A billion dollars…

A hundred billion dollars…

Eight hundred billion dollars…

One TRILLION dollars…

What does that look like?

We’ll start with a $100 dollar bill. Currently the largest U.S. denomination in general circulation. Most everyone has seen them, slighty fewer have owned them. Guaranteed to make friends wherever they go.

A packet of one hundred $100 bills is less than 1/2″ thick and contains $10,000. Fits in your pocket easily and is more than enough for week or two of shamefully decadent fun.

Believe it or not, this next little pile is $1 million dollars (100 packets of $10,000). You could stuff that into a grocery bag and walk around with it.

While a measly $1 million looked a little unimpressive, $100 million is a little more respectable. It fits neatly on a standard pallet…

And $1 BILLION dollars… now we’re really getting somewhere…

Next we’ll look at ONE TRILLION dollars. This is that number we’ve been hearing so much about. What is a trillion dollars? Well, it’s a million million. It’s a thousand billion. It’s a one followed by 12 zeros.

You ready for this?

It’s pretty surprising.

Go ahead…

Scroll down…

Ladies and gentlemen… I give you $1 trillion dollars…

(And notice those pallets are double stacked.)

So the next time you hear someone toss around the phrase “trillion dollars”… THAT’S what they’re talking about!!

Mortgage rates today for 30 year fixed FHA loans have come extremely close to 5% flat, which is almost at the absolute lows that we experienced about 6 weeks ago.  See the mortgage bond chart below…

Click on image for full-sized view.

Since then, the Dow Jones Industrial Average is down 1800 points and is now down more than 50% from the all time high back in the summer of 2007.

Several things have been brought up recently that will help Homeowner’s save money aside from normal refinancing.  The Obama Mortgage Plan includes a provision to allow certain borrowers to get loans up to 105% of the value of their home to reduce the rate and lower the payments on their mortgages.

Also, Loan Modifications are getting a boost as well now than another $75 Billion has been thrown at lenders to help reduce Homeowner’s mortgage payments and help stop the rapidly increasing foreclosure rate.  Loan Modifications are great if you are unable to refinance for one reason or another, but you still have room to save money or improve your mortgage structure.

Credit Repair is becoming a very important variable in the equation now as well.  The requirements for minimum credit score keep increasing and I don’t see this stopping any time soon.  Having 700 credit is no longer enough to make you a top-tiered borrower.  You need 740.  No joke.  I recommend www.liftmyfico.com as a great place to find out if Credit Enhancement is something that would be good for you.  Chances are it will, unless you already have a 740+.

Stay tuned. More to come.

All I can say to that question these days is… “Good question.”  I am not used to the Government controlling the markets, but I can tell you it’s quite boring compared the Real Free Market.  There is a lot less opportunity, but a lot more equality, so you can decide if that’s good or bad.  Take a look at the Fed’s Mortgage Bond purchases for the week of Feb 19th to Feb 25th by clicking on this LINK.

You’ll notice they are concentrating on the 4.5% coupons.  This makes me think we should see rates go lower, but rates have been quite flat during the period.  Here is a chart of the action during the time the Fed was in the Pit buying:

Click on image for full-sized view.

As you can see, the 4.5% bonds were DOWN during the period in which the Federal Reserve bought $12 Billion worth.  How can that be?  Honestly, I’m stumped by this one.  I don’t get it one bit.  These last two weeks have made no sense with regard to interest rates, bond prices, etc. 

I still believe we’re going to see lower rates, but I’m overly curious to figure out why we haven’t arrived there already based on what has transpired.  As soon as I figure it out, I will be sure to let you know.  Stay tuned. More to come.

There aren’t any true details released yet, but a lot of people have been asking me about it, so I wanted to put out as much information as I possibly could.  I think the best thing to do right now is look HERE and read up on the “outline” of what’s expected. 

For the most part, it will only help people who are already behind on their payments, in the foreclosure process, or near the foreclosure process.  It will help a lot of Homeowner’s that would have otherwise added to the foreclosure numbers.  In my opinion, this is the best thing the New Administration has done to help the American economy.

People, especially politicians, tend to forget that the housing market is what drives our economy.  It’s extremely important to the need for services and purchasing of goods.  Our economy cannot recover until there is a bottom in housing.  This should actually help us get there. 

Stay tuned.  More to come.

President Barack Obama will sign the newly passed $787 billion economic stimulus bill Tuesday in Denver, officials said today.  Speaking in his weekly radio and Internet address today, Obama said, “I will sign this legislation into law shortly, and we’ll begin making the immediate investments necessary to put people back to work doing the work America needs done.” At the same time, he cautioned, “This historic step won’t be the end of what we do to turn our economy around, but rather the beginning. The problems that led us into this crisis are deep and widespread, and our response must be equal to the task.”

The Bill, which is over 1,000 pages long, is a mystery to most, including many of the Congressional Members who voted for it.  With something this complex and this important, we should take the extra week or two to get it right.  There is no way any of the Congressional Members could have had time to read and fully understand this Bill before voting on it.  1,000 pages is just too much for anyone to digest in such a short time.  I sure hope they get it right because the future of our Financial Markets and our Nation, depend on it.

Mortgage Rates were improved slightly this week.  30 year fixed rates are in the low to mid 5’s for the most part.  I still encourage everyone to get in position to get locked in.  Once this opportunity passes, there are going to be a LOT of people who wish they had taken advantage.  Don’t be one of those people.

 Click on image for full-size view.

A Quick look at the chart shows that the Longer-Term Uptrend is still in tact, but just barely.  If it can hold, look for rates to move lower.  If it doesn’t, we’ll probably see another flat range for Mortgage Rates for the next couple weeks.  Stay tuned, details about the Stimulus to come soon.

The President and Secretary of the Treasury Tim Geitner will be unveiling their financial plan for the country aimed at dealing with Banking and Housing problems along with the safety of the financial markets for Investors.  Take a close look at today’s chart and the drawings I made manually to see where we’re headed on Interest Rates.

Today was actually a Huge day from a Technical Standpoint.  You’ll see that I’ve drawn two yellow lines on the normal Bond Chart that I provide.  One is a longer-term up-trend in Mortgage Bond prices and the other is a shorter-term down-trend.  At today’s open, they were intersecting.

Click on Image for full-sized view.

This means we were expecting prices to move sharply in one direction or the other.  Although I believe that rates should go lower from here, I also know that there can be bumps in the road.  However, we finished up 31 basis points and closed above the down-trend line, which is just fantastic.  This rally occurred at the very end of the day, which is an even better sign.  Not only that, but the information that is provided tomorrow by the new Administration SHOULD provide a boost to everyone’s confidence in finding a solution to the financial mess and should also put some legitimate structuring to the Banking system to ensure that lending resumes and competition continues.

As usual, keep your fingers crossed, but I expect to be locking loans tomorrow first thing in the morning.  Stay tuned. Much more to come.

Click on Image for full-sized view.

Well, we’ve now seen rates take a legitimate beating over the past couple weeks.  I encourage everyone not to panic as this is pretty normal market fluctuation.  Remember, the market is designed to take advantage of emotion.  The facts remain, the Fed is buying Mortgage Bonds in great abundance and although they seem to be absent at the moment, the next time you know their in the building will be big. 

I’m advising everyone to get started on a refinance now if you were planning to do it any time soon.  Get yourself in a position to get locked in the next time we get a big move.  We should see this happen at least one more time, but beyond that it’s hard to say. 

It’s also very possible that we’re seeing the lowest Mortgage Rates of our lifetime right now, so if you haven’t considered buying a home yet, it’s about that time.

Keep your ear very close to the ground at this point.  The next alert to lock might be the last one with historically low rates before turn for the worse.  IF you have been trying to reach me and had trouble doing so, I greatly apologize.  Email me if you have to.  Talk to you soon.

It always blows me away when the market is so obviously wrong, but just cannot be fought.  How can anyone think that we’re in an inflationary time?  Last time I checked, home prices are down significantly, they can’t even give cars away, and the wealth of this country and the entire world for that matters has been obliterated in recent times within the financial markets.  Am I the one that’s crazy?  Nope.  That’s just the market.  It’s always forward looking and it’s always going to be trying to predict what’s going to be happening 6 months from now if not further down the road.  So what does this mean?

It actually means that we could be nearing the end of the deflationary cycle we’ve been in for some time.  This would cause the dollar to lose ground, interest rates to rise, oil prices to climb, etc.  However, home prices are completely separate from the talks.  The housing market is it’s own monster and doesn’t respond much to deflation or inflationary cycles.  It sure can cause them, but it is rarely a result of them.

Take a look at today’s chart…
Click on image for full sized view.

We are right at a support level right now that should hold at least a couple times.  It’s pretty clear to me that the Government has limit orders placed at those levels to keep prices from going below that level.  If we can just stay in this channel, we’ll see rates stay in the 5-5.5% range for while. 

My advice right now is to get locked in the next time we get anywhere close to the highs in the channel.  It’s going to be a great time to lock.  There is an outside chance that we could see prices climb higher, but I think this possibility is growing slimmer with talks of inflation in the works.  Play it close to the chest here.  The next time we reach the highs of this channel will likely be the last.

30 Year Fixed rates finally priced down for the worse on Wednesday, after a pretty consistent month right at 5% with a few dips into the 4’s along the way.  A look at the chart will show you that it’s not much of a move, but something to keep an eye on for sure…

Click on image for full-sized view.

The 44th President, Barack Obama officially took office on Tuesday.  The Financial Markets were hammered on the day of his innauguration, but bounced back today for a net of almost nothing.  For the most part, Traders are concerned that Obama’s thoughts will be more with Consumers than with Companies.  This usually won’t be good news for the Stock Market or any shareholders of common stock.  However, today was proof there is some big money that keeps jumping in every time the market gets to this level.  Although this is good for your 401k, it’s not necessarily good for the Mortgage Bond Market as you can see by today’s 28 basis point decline.

With Foreclosures still accelerating accross the country, we are bound to continue to see Regional Banks go under.  Not only that, two giant banks, Bank of America and CitiGroup are on the verge of having their common stocks wiped out completely.  More of the same problems occuring.  These banks just have too much exposure to the mortgage market and with home values decreasing, it’s becoming more and more difficult for them to remain “Solvent” according to the standard of the FDIC based on the “Mark to Market” requirements.

Whatever you do, do not be tempted to buy common stock of Citi or BofA.  Stay tuned.  More to come.

Even through all the negativity in the NEWS over the past year, you haven’t heard anyone talk about how really bad it is out there for Housing.  Take it from me, as someone who deals with home prices accross the country every single day, it could be a while before we see any real appreciation.

Let’s look at both sides of the equation:

Positives: Home Prices are low, rates are low and new homes are not being built in great numbers any more.

Negatives: Borrowing money is very difficult and getting more difficult, unemployment is on the rise and expected to reach 10% before stabilizing and many people have had bad experience with homeownership over the last few years.

Now, I’m not saying that home prices won’t be stable for the next five years OR that some areas of the country won’t see appreciation in the next 5 years, but I am saying that as a whole, home prices for our Country are going to be flat fo the next 5 years.

Here’s why: In order for home prices to go up, that means that someone coming in behind the last buyer is willing to pay more than that first buyer.  If you really think about that, it requires a tremendous amount of confidence on the part of the second buyer.  Confidence in their employment, confidence in their financing, confidence in the fact that the value of that home will go up further from there.  Many of the people who wanted to own a home over the past few years bought one during that time.  All those people that are no longer homeowners will likely not buy again for a while because they had a bad experience.  The ones who remain homeowners are probably not going to buy again and even if they did, they would need to sell their existing home.  With financing becoming more difficult and more money needed to buy a home in the first place, it’s going to be quite some time before the proper confidence is instilled as a whole accross the country.

I’m not saying you should sell your real estate if you own it.  Real estate is a long-term investment and should always be looked at in that way.  If you can have that vision, then you shouldn’t sell.  Contrarily, the next 5 years are a good time to buy for the long-term.  You WILL need to have a small down payment and you SHOULD expect the financing to be more difficult with more hoops to jump through.  But, by the time financing is easier to achieve and the Confidence has been restored, everyone will be looking to buy and you’ll have less to choose from in your price range.

30 year fixed rates are still right at 5% as dictated by the Government’s control of the Mortgage Bond Market.  We don’t expect anything to change in the next few days, but the next few weeks will be very interesting.  Stay tuned.