Long Beach Mortgage Rates Report: Emergency Fed Cut: Jan 22, 2008

The Fed cut .75% in an emergency move this morning.  From Bloomberg:

The Federal Reserve lowered its benchmark interest rate in an emergency move for the first time since 2001 after tumbling global stock markets and a jump in U.S. unemployment threatened to push the economy into recession. 

The central bank lowered the benchmark overnight lending rate to 3.5 percent from 4.25 percent, the Federal Open Market Committee said in a statement in Washington. Policy makers weren't scheduled to gather on rates until Jan. 29-30.

``While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate,'' the Fed said in a statement in Washington. The FOMC took the action ``in view of a weakening of the economic outlook and increasing downside risks to growth.''   

Policy makers set aside concerns about inflation to lower borrowing costs for the fourth time since September after unemployment hit a two-year high and U.S. stocks slumped. Chairman Ben S. Bernanke shifted the Fed's stance to a more- aggressive approach in remarks this month citing a need for ``decisive and timely'' action.

We think this will be positive for mortgage bonds and rates.  We currently recommend that mortgage applicants lock ONLY purchase loans that are closing in 15 days or less and that all others float the mortgage rate.  No change.

Posted on January 22, 2008 00:58:04 by Brian.Brady

Move Your ASS-ets Long Beach: Millenial Economics- Part One

It's been a long time, Long Beach real estate investors.  I haven't addressed the Move Your ASS-ets Long Beach series since May, 2007- I apologize.  This series was designed to examine the ways different generations approach money and investing.  In the first part, I discussed Depression Economics- all about the World War Two generation.  The second entry was Boomer Economics (their kids).  Today, I want to address young Generation X and old Generation Y.  For the sake of simplicity, I'll refer to them as the Millennials.

The Millennials are actually Gen Y but the younger members of Gen X act more like them than the Boomers.  The age group I'm talking about is 21-35.  Many of the home buyers Laurie Manny and I help fit this category so this article is about most of you.

Millennial real estate buyers, in Long Beach, are very much like the stereotypical Millennial featured by the media.  They are extremely tech-savvy and love communication gadgets.  Some of them are connected to me on Myspace (www.BrianonMySpace.com) or on Facebook.  They prefer e-mail and texting to phone conversations and want to be engaged in the process of real estate investing.

In my opinion, the Millennials represent the one group in America that has the best opportunity to be financially independent at a young age.  There is only one problem with the Millennial real estate investor; he/she wants too much too fast and lacks the financial discipline to get there.  They've been spoiled by the Long Beach real estate boom and are having a difficult time dealing with the bust.

Let me explain because it sounds like I just called my Millennial readers a bunch of spoiled brats.  I assure you that nothing could be farther from the truth.  This age group did an excellent job understanding that the world is much different than it was ten years ago.  Robert Kiyosaki and Donald Trump have educated this group about the importance of self-reliance and the lucrative nature of real estate as a wealth builder.  Here's what those two gurus forgot to tell the Millennials:

LEVERAGE BOTH ENHANCES AND CRUSHES RETURNS

Debt, when used to acquire assets, can dramatically increase a return on investment in a rising market- it also exacerbates the loss in a declining market.  Many Millennials have experienced both high returns and high losses in Long Beach real estate investments because of the biased advice they received from Long Beach real estate and mortgage professionals.  Where we go from here will determine how quickly they retire.

Millennials hate to be sold; we all do but this group abhors it.  The practice of persuading a generation about a wealth building concept, however, turned out to be the ultimate sales job.  I hope to unwind that "sales job" and offer some straight talk about how to get what they want (to be rich) while helping them avoid the mistakes many new investors make.

I planned to devote just one article to the Millennials but it looks like I'll need 2 or 3 to properly cover the advice I have for this group.  Recent Long Beach real estate markets activity suggests that some amazing opportunities will materialize in the next 6-12 months; I want the generation that should be the wealthiest to realize their potential.

So...I'm back on the Move Your ASS-ets Long Beach Series.  For the next week or two it will sound like Move Your ASS-ets Long Beach Millennials.  Hang in there with me and let's learn something together.

HOMEWORK:

Move Your ASS-ets Long Beach: Depression Economics

Move Your ASS-ets Long Beach: Boomer Economics

Brian Brady

858-777-9751

Posted on January 18, 2008 16:17:46 by Brian.Brady

Long Beach Mortgage Rates Report: January 18, 2008

Fed Chairman Bernanke testified before Congress yesterday noting his "increased concerns for slow economic growth".   While he was careful to say that The Fed doesn't forecast negative growth (READ: recession), he did believe that the risks of a recession have increased.

I think the Fed Chairman is either (a) clueless or (b) practicing the art of circumspect rhetoric.  I'm inclined to believe the latter.  I think Bernanke is delivering bad news.  He offered support for radical fiscal policy (permanent tax cuts) to Congress.  When a Fed Chairman signals to Congress that the ball is in their court, to stave off a recession, he believes that monetary policy (rate cuts) have become useless.

Read more »

Posted on January 18, 2008 12:36:28 by Brian.Brady

Long Beach Mortgage Rates Report: January 15, 2008

Long Beach mortgage rates refuse to go up, regardless of my advice to lock all loans, purchase or refinance,  at application.  Somehow, I didn't drink the Kool-Aid the Wall Street traders are drinking.  We locked one 30 year fixed rate loan at 5.375% rate today (5.59% APR) for a $400,000 purchase money mortgage.

If you listened to my advice last week, I probably cost you an eight of a percent on rate, meaning that if you held out until today, the rate on your Long Beach mortgage would be .125% less than last week.  It is important to note that I almost am always biased towards locking rates.  Inflation is still rearing its ugly head and the bogeyman IS around each corner.

I believe that the excitement of a potential half percent rate cut, by the Fed, on January 30, is already built into the market.  This means that I believe that there is MUCH more risk of Long Beach mortgage rates popping up .375%, quickly, than I believe there is reward to holding out for that last eight of one percent.  The risk just doesn't seem worth the reward, in this environment.

Tomorrow, there are two big numbers coming out, the Core CPI (prices excluding energy and food), sometimes referred to as Core Inflation, and the Industrial Production Capacity Utilization Rate, which measures the level of production in this country.  Both are expected to show that we are contracting, or in a recession.  However, if the Core CPI is higher than expected, it could throw mortgage bonds into a free fall which leads to higher mortgage rates.

Too much risk for my liking.  Lock all loans: purchase and refinances at application.

Posted on January 15, 2008 13:21:46 by Brian.Brady

Mortgage Rates Report is Now Available On Twitter

Mortgage Rates Report, the nationally-syndicated update about mortgage rate movements, is now available on Twitter. 

Twitter is a FREE broadcast service that can be directed to your phone, e-mail, or Twitter page.  I'm a late adopter to Twitter but see the value of getting mortgage market information to tech-savvy customers and REALTORs.  Click the link above for my Twitter feed.

Here is what you can expect from the Mortgage Rates Report feed on Twitter:

1- Market sensitive updates- I'll only tweet you if there is a move in the market with advice to float or lock.

2- Communication at least once a week.

3- I won't be responding to questions on Twitter- just broadcasting market sensitive information

Posted on January 12, 2008 03:13:49 by Brian.Brady