My New Blog

So i took my kids to see Santa at a christmas party 2 weeks ago.  My daughter is almost 4 and my son is 2 1/2.  My daughter was reluctant to go by Santa- but because her brother jumped right on his lap- she had to sit too.

We are driving in the car last week- my daughter says "I am so glad that i am getting that Princess Kitchen for Christmas."  I asked who told her she was getting that for christmas?  She told me Santa would deliver it Christmas Eve for me- he told me when I was on his lap"  The girl has 2 kitchens already and i have actually resorted to tossing the little food in the garbage that comes with them because i am always stepping on these little food items.  So i guess one more kitchen will be added to our home.. Santa should know that we already have 2 too many kitchens:)

I think it is interesting how some people in government think that the interest rates of 4.5% will save the housing market.  The only thing that these rates are doing are helping clients that have a good mortgage payment and equity position get a lower payment.  I think that is great and i am delighted to have the business.  The people that are in trouble or are falling behind on their mortgages or have lost a job or taken paycuts this past year- unfortunately- these people we probably can't help and can't take advantage of these historical rates.  Right now - clients have to have good credit- 700 or above is the "new benchmark".. actually clients with 740 or higher will receive the best interest rates.  Clients have to have equity.. typically 20% is good but 90% might do with a little bit of a rate adjustment.  Lastly- clients must have income that is verifiable.  If you don't pay taxes to Uncle Sam-then don't assume you can get a mortgage- basically from Uncle Sam either.

The Federal Reserve cut the key interest rates this afternoon by .75%.  This brings the Prime rate down to 3.25%.  This usually does not help the bond market because on this news the stock market really rallied....BUT luckily today- it was a double whammy.  The Fed said they were going to buy mortgage back securities and Pimco- the largest bond holder said it would by bonds as well.  This is what is spurring a huge rally in the bond market which is driving rates lower.  We are trading at the all time highest levels- so we may see the bonds pull back a little - but looks like lower rates ahead. We are definitely sub 5% at this point.

Today is Fed day.  So far the crystal ball readers say the Fed will reduce the federal funds rate by .5%- Maybe even do a .75% cut.  The Fed Funds rate currently stands at 1%.  Market Volatility is a sure thing- and Remember- The Fed cutting Federal Funds rate does not mean interest rates will follow. Typically it will mean just the opposite.  The Fed is doing this to get money off the sidelines and back in play in the stock markets.. this takes money from our bond market and causes rates to increase.

Another Ponzie scheme in the market... Bernie Madoff mad some news.  What is it with greed in this day and age?  First Petters now this?  Bernie dealt with lots of high profile people and high profile hedge funds investors.  Some of these funds have been hit so hard they will now need to raise capital and to do so- they will potentially sell mortgage bonds.

Lastly- i know many of you are waiting for the rates to get better or drop to 4.5%. I understand everyone wants the best rate available- but these are the best rates we have seen in over 50 years.  We are much closer to a bottom than we are to a top at this point.  We will not know a bottom until it has passed...

Thanks for reading