MORTGAGE MARKET INFORMATION

The markets (stock, bond, mortgage, currencies, precious metals, you name it!) continue to be extremely volatile. The Mortgage Bankers Association reports that the current weekly purchase index declined by 1%, while refinances rose 12%. Average rates for the previous week rose to 6.47%, up from 5.99% for 30 year fixed rate mortgages. Apparently, everyone jumped on the bandwagon when the rates dipped.

Mortgage rates are driven by the pricing that occurs in the Mortgage Backed Securities market (MBS), which normally moves in the opposite direction of the stock market. That pattern has been broken by the current economic situation. Pricing of MBS fell when today's economic data was released along with the DJIA drop of 400 - 500 pts. In more normal times, investors would seek a safe haven by rushing into safer investments such as treasuries, bonds and MBS when the stock market declined. Keeping an eye on the MBS pricing data is the best way to see what's happening with rates but with our current whipsaw market activity, it's hard to tell what will happen next (for example, pricing ranged from -8/32 to +20/32 in the first 4 hours of trading today).

LENDING UPDATE

With the continued volatility in rates, many people are choosing to get their loan application underwritten and await the next downturn in rates. This makes a lot of sense because there is an absolute flood of applications submitted when rates fall resulting in very long underwriting lead times . The best plan is to submit the application, get underwriting approval, and float the rate until it dips.

Did you know that the higher conforming loan limit of $729,750 will expire on 12/31/08? All loans using this temporary loan limit must fund by 12/31/08. A rush of borrowers seeking this program is expected as we near year-end, so get your application in as early as possible if your situation requires the higher loan amount.

What will the conforming loan limit be after 12/31/08? The new conforming loan limit of $625,500 is expected to be ratified by Fannie Mae, Freddie Mac, and FHA in November. I'll keep this blog updated on the status of the new loan limits

Why are loans taking so long to fund? Many people seeking financing are amazed at the scrutiny given to every detail of their financial situation. Underwriting guidelines now require full disclosure and that every aspect of the application is solid (income, assets, and credit). Appraisals are reviewed. Documentation is being validated through independent sources (ie, going directly to the financial institution to verify balances, pulling IRS transcripts to verify W2's/income). This is why underwriting is taking so long (especially when there is an influx of loan applications due to a dip in rates).

Are you interested in finding out what your refinance options are in this market? Are you considering purchasing a home and need to know what you are qualified to purchase given today's dynamic lending environment? Please call me. I'm available to help you navigate this market!

Please feel free to contact me if you have any questions regarding the information provided here.

Sally Audet
Wells Fargo Home Mortgage
CELL: 408-981-1089
EMAIL: sally.audet@wellsfargo.com
WEB: www.wfhm.com/sally-audet




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