Long Beach Mortgage Rates Report: June 25, 2008

No recommendation until tomorrow.  All eyes are on the Federal Reserve Open Market Committee today.  At 2:15PM (EDT), 11:15 (PDT), they will release their interest rate decision and statement.  The fixed income securities market believe there is a 43% chance that the Fed will RAISE rates, to stifle inflation, in August and that there is a 61% chance that the hike will come in November.

The eyes will be on the Fed’s commentary, though:

“We expect the Fed to keep the funds rate at 2% today but to shift to a more hawkish statement by placing more emphasis on inflation over growth risks,” strategists at Credit Suisse wrote in a research report. “The Fed will likely use this meeting as an opportunity to set the stage for a potential rate rise in August.”

If the Fed signals that rates could rise as early as August, expect Long Beach mortgage rates to jump .25% higher, from today’s 6.375% 30 year fixed rate, over the next few weeks.  If the Fed signals rate hikes are “possible” as a way to fight inflation, expect rates to stay level through in July (6.25% to 6.5%).  Finally, if the Fed shifts back to its anti-recessionary talk, we could see rates drop down to 6%.

As you can see, there are a lot of “ifs".  This is why today’s Fed commentary is all important.  The Fed’s ambiguity has traders convinced that higher rates are a foregone conclusion.  Here’s the silver lining hidden in this dark cloud; mortgage rates are equal to what they were in July, 2007.  The Fed Funds rate was at 5.25%, then.  Today, the Fed funds rate is at 2.25%.  What that means is that mortgage rates SHOULD be able to withstand some 5-6 rate hikes and stay under 7%.

Alas, markets are discounting mechanisms.  We still think there is a lot of risk to higher mortgage rates until the commodities bubble bursts.

Posted on June 25, 2008 08:08:48 by Brian.Brady

Rising housing, gas and food prices are driving people out of their cars and back into town...

The Economy is Hitting Home

The Economic Squeeze

Watch this interesting 2 minute video by ABC News, Diane Sawyer.

Rising housing, gas and food prices are driving people out of their cars and back into town…

The mortgage crisis combined with rising housing costs related to the sub prime crisis are really starting to hit home for many Southern California residents who still commute. With the price of gas now topping $4.50 per gallon at most Southern California stations this is becoming a very serious issue. I drive an SUV (which I still love, sigh…). Yesterday I spent $143 to fill the tank; can you say OUCH?!? That equates to over $600 per month in gasoline for me and I rarely leave the Long Beach area! Looks like I am going to have to think about a smaller, more fuel efficient car pretty soon.

By the way, has anybody else noticed that a tank of gasoline isn’t going as far as it did? It seems to be burning up a lot faster these days. I asked a friend who works at one of the refineries about it, he mentioned that they are adjusting the ethanol content in the mix which causes the fuel to burn faster. Gee thanks George W!

Buffalo NY Realtor Colleen Kulikowski has not only noticed less miles per gallon, she reports that Mobil Oil is advertising no ethanol in their mix up in her area.  After experimenting she is seeing a better return on her miles per gallon.  Definately something to consider when deciding where to pump that liquid gold!  Hey Mobil, is that nationwide?  Or just up in Buffalo?

Many homeowners have faced or are facing foreclosure due to adjusting mortgages, which few can afford. This combined with the rising cost of gasoline, food (have you checked out the prices in the supemarkets lately - good grief) and just about everything else has just about everybody rethinking just about everything.

Many homeowners are interested in downsizing their homes, are seeking affordable housing and are moving closer to their places of employment; or are seeking ways to work remotely from home.

Long Beach Real Estate is affordable and beach close.  Oh and by the way, we have better weather down here at the beach.  Cooler in the summer, wamer in the winter.

What are you doing to ease the effects of the economy?

Posted on June 22, 2008 17:04:50 by Laurie.Manny

Long Beach Mortgage Rates Report: June 19, 2008

We’re still advising all Long Beach borrowers to lock all mortgage rates at application. The risk of the Fed raising rates far exceeds the opportunity for lower term rates. Watch this one minute video to understand what exactly has been happening in the mortgage markets, since May 2, 2008 and what I think WILL happen in June and July, to mortgage rates.

Brian Brady

(858)-777-9751

Posted on June 19, 2008 12:08:23 by Brian.Brady

Long Beach Mortgage Rates Report: June 12, 2008

Long Beach mortgage rates are headed higher.  Lock all rates at application, regardless of closing date.

The trend is clear; the Fed believes it has done all it can to stave off the banking crises and is now focusing its efforts on inflation.  This morning, retail sales were up and the dollar is strengthening.  If stagflation is the fear, the current strategy of targeting core inflation may be abandoned for the more radical Paul Volcker-style approach to tame inflation. 

While I believe the higher mortgage rate cycle will be shorter than the 80-s style interest rate hikes, it’s clear to me that Bernanke is talking differently than he did in 2006 and 2007.  The effect?  We could see Long Beach mortgage rates rise as much as 2% in the next two years.  I still believe that a five year ARM will offer the best solution because interest rates move in cycles; I think we’ll see mortgage rates under 6% again in 2011.  Today?  The trend looks like we’re headed higher.

What then, should be your strategy?

1- There will be little periods of weakness in rates this year and you should jump on any chance you have to get a 5/1 ARM under 6% or a 30 year fixed rate under 6.5%.

2- If you can’t get the home loan you want today, get your documentation to me anyway. Secure an approval that is good for 90 days and wait for those periods of weakness to lock in the right rate.

3- If you were thinking of buying a home in Long Beach, mortgage rates are about as good as they’ll get for the next two years.  Get pre-approved, contact your REALTOR and start looking.

Brian Brady

(858)-777-9751

Posted on June 12, 2008 03:27:19 by Brian.Brady

Long Beach Mortgage Rates Report: June 9, 2008

Posted on June 09, 2008 11:51:55 by Brian.Brady