Ryan’s Mortgage Blog:
Another crazy week in the market huh? In the mortgage world as most of you know and some have commented on… jumbo loan ($417k and over) rates are increasing. I want to be as brief as I can be on this topic mainly because things are changing daily and there are just too many angles I could take on this subject. These rate increases are not shocking and should only be a temporary set-back. Like I said last week…loans are still out there waiting for you “good borrowers”, the only difference is the guidelines have changed. What this means is the industry is trying to find the right recipe for a successful recovery. Most of us know how the sub-prime mess caused all of this so I don’t want to repeat it. Lenders are not lending to risky borrowers or are making them pay for it. There was a lot of finger pointing going on but now the government is stepping in and the Feds will most likely be making some changes very soon. Some of you may not have heard but last week the Fed injected $40 Billion into the U.S. banking system for the sole purpose of purchasing mortgage backed securities in the secondary market.
To be honest I think the media has a lot to do with the current jumbo loan problem. Some of the reports they have made are one sided or misleading, causing a scare. Why does the media do this? Simple, to gain publicity. Granted, most of the stories are pretty accurate, but they made a mountain out of a mole hole. It was only a matter of time before the sub-prime market fell on its face (a different story in itself). The problem here is the media started questioning the entire mortgage market because of the sub-prime fiasco (along with other factors) and this started scaring investors. After reading negative headline after headline, investors and the secondary market have been a roller coaster. Now investors are hesitant as to where they should put their money, especially when it comes to Real Estate and mortgage backed securities. But again…it is not as bad as it sounds! Sure, you may think I am biased because I am in the field, but if I thought it was that bad I would be getting out myself. I have heard from many sources that this will be a very short term problem. Sure the crazy sub-prime loans will never be available again, but that is because they were abused.
Lastly, I never like to admit this…. but because of all the weeding out and changes going on, you may want to wait a couple weeks to refinance because rates may be dropping after the recent increases. Once this change happens….jump all over it! As far as buying a home goes, I never like to say wait on that. If you can qualify for a loan and you found a home you like, go for it. In the long run, you can always refinance your loan if rates drop. Yes, it may cost you a couple thousand dollars extra to refi, but may be very worth it in the long run if you get the house you wanted. Please contact me with any questions or comments at RBaker@PeregrineLending.com or 805-540-0866.