Just when you thought we were going to be hit with a massive recession and rock bottom interest rates; the market does a U-turn with minor visions of consumer spending, a decrease in the deficit and uncertainity in the bond market pushing rates upward. Meanwhile Bernanke says that the economy is sluggish and the housing market continues to be in trouble which is another way of saying the FED will make more rate cuts in the future. This is certainly the picture we have been seeing in the Manhattan Beach and Beach Cities' real estate market over the last three months. If you are feeling confused join the crowd.. if you can find room.
Dan Green in The Mortgage Reports and Lou Barnes' Mortgage Credit News offer interesting views on what is happening and why rates have jumped since last week. The experts at the Bank Rate Trend Index in a change from last week shows the majority of the experts polled ... 46%... believing rates will continue to go up while 31% believe they will remain unchanged and a scant 23% see rates falling.
The truth is that no one has a clue whether or not this trend will continue into next week or next month... as the national economy may just depend on whether or not some guy sneezing at the Wall Mart head office next week brings the economy to its collective knees. Is it too much to ask for one week of stability?
Here in CA the state has announced The 90 Days of Hope a program that is supposed to slow the growing number of foreclosures. The program assumes that people in foreclosure are there because of financial problems and want to stay in their homes which may be at odds with the the numbers of owners who are not in financial distress but have instead chosen to walk away rather then make an increased mortgage payment. Seems to me that this is just another smoke and mirrors program that will only delay the issue rather then solve the problem.
But it's not all bad news... the Writers' Strike is over and work is again resuming at Raleigh Studios in Manhattan Beach. Conforming loan limits are definitely going up which will have an impact on our market making it easier for entry buyers to purchase homes in Manhattan beach and all the Beach Cities if they don't have to deal with the jumbo loan market issues. Qualifying will be tougher and good credit along with money for a down payment will be required. One good thing to come out of this mess is the number of times a borrower has to sign paperwork that states and restates his financial position and the terms of the loan he/she is obtaining. A rate amortization chart is even included along with the amount you may owe on a balloon payment at the end of the loan term. It's going to be harder to plead stupidity in the future.
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