Jim's Soap Box (November 08)

Jim’s Soap Box

Arizona Real Estate Newsletter – November 08

GOOD NEWS – A handful of my prayers were answered today as rates plummeted into the mid 5’s. It is the largest single day reduction in rates I have seen in the last 20 years. The refinance mini-boom I was predicting in September may have arrived this morning with the Feds public commitment to infuse another $800 billion into residential lending organizations.

The goal of my newsletter is to provide educational material mixed with Jim’s unsolicited yet fascinating opinion on the Arizona housing market and real estate ownership in general. If you would like me to address a specific topic in the future, please email it to me and I will respond in the following newsletter.

The Federal Reserve
Nov. 25 (Bloomberg) – this was the lead article from Bloomberg.com this morning
The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion.

The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a program of $200 billion to support consumer and small-business loans, the Fed said in statements today in Washington.

With today’s announcement, the central bank is starting to use some of the unorthodox policy tools that Chairman Ben S. Bernanke outlined as a Fed governor six years ago. Policy makers are aiming to prevent a financial collapse and stamp out the threat of deflation.

The Fed will purchase up to $100 billion in direct debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks and up to $500 billion of mortgage-backed securities backed by Fannie, Freddie and Ginnie Mae.

“This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally,” the Fed said.

Analysis
The news released this morning is absolutely killing 10 & 30 year bonds. Being that Bonds and 30 year Mortgage notes traditionally have a congruent relationship, mortgage guys (like me) love it when Bonds are in the tank! As of 9:30am this morning (AZ time) the yield on the 10 year Treasury bond is the lowest I have ever seen it (possibly ever) at 3.13%. And the 30 year Treasury bond is also hitting the tailpipe at 3.64%. This is great news for homeowners- Mortgage rates are down!!

Call to Action
The last 3 times this calendar year when rates dipped into the mid to high 5’s it was short lived. I hope that today’s rates have some sustainability but I doubt it. If recent history repeats itself, we have about 2 or 3 days before it jumps back up!

Here are my rates on Nov 25th. These rates assume that you are a perfect borrower*. If you are not that perfect borrower – rates are still very good.

30 year fixed 5.625% (no points)

30 year fixed 5.250% (paying one point)

I know it is 2 days before Thanksgiving, and you’re thinking about oyster dressing, the In-laws, black Friday, & the spread of the Cardinals Eagles game – but you owe it to yourself to call or email me if this can help you.

If these rates cannot help you because you currently have a lower rate – then you really have something to be thankful for this year.

HAPPY THANKSGIVING!!

*** If you know someone who would benefit from my educational newsletters, please forward their name and email address to me and I will add them to our educational circle.

All Best!!
Jim

JIM CUNNINGHAM
Nova Home Loans
8800 E Raintree Drive #180
Scottsdale, AZ 85260
480 614-6413
602 434-8261 cell
jim@novahomeloans.com
http://activerain.com/jcunningham