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February 18th, 2010Categories: Mortgage & Finance reVIEWS

Mortgage markets reeled Wednesday after the Federal Reserve released the minutes from its January 26-27, 2010 meeting. Mortgage rates in Georgia are now at their highest levels since the start of the year.

The Fed Minutes is a follow-up document, delivered 3 weeks after an official FOMC meeting. It’s a companion piece to the post-meeting press release, detailing the debates and discussions that shaped our central bankers’ policy decisions.

The Minutes is a terrific look into the Fed’s collective mind and, yesterday, Wall Street didn’t like what it saw.  Specifically, the report disclosed that:

1. The Fed plans to break support for mortgage markets after March 31, 2010
2. Raising the Fed Funds Rate will be a key part of the Fed’s strategy to tighten monetary policy
3. The fundamentals behind consumer spending strengthened modestly

Furthermore, the Fed Minutes said that there is a growing risk of “higher medium-term inflation”. Inflation, of course, is awful for mortgage rates.

Overall, the Fed’s economic optimism appeared stronger after its January meeting as compared to its December one.  A stronger economy should lead to better job growth and higher home prices throughout 2010.

Mortgage rates were up yesterday but they remain historically low. And many analysts think that after March 31, 2010, rates will rise even more.  Therefore, if you’re buying a home in the near-term, or know you’ll need a new mortgage, consider moving up your time frame.

Every 1/8 percent makes a difference in your household budget.

Tags: Economy, Federal Open Market Committee, Federal Reserve System, FOMC, Mortgage, Mortgage Rates, Wall Street

Written by Chad Lariscy//Discussion: Please leave a comment.

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January 27th, 2010Categories: Mortgage & Finance reVIEWS

The Federal Open Market Committee ends a scheduled, 2-day meeting today in Washington. It’s the first of 8 scheduled meetings for the policy-setting group in 2010.

The group adjourns at 2:15 PM ET.

As is customary, upon adjournment, the Fed will issue a press release to the markets recapping its views of the country’s current economic condition, and the outlook for the near-term future.

The post-meeting statements from the Fed are brief but comprehensive. And Wall Street eats them up.  Every word, sentence and phrase is carefully dissected in the hope of gaining an investment edge over other active traders.

It’s for this reason that mortgage rates tend to be jittery on days the FOMC adjourns. Wall Street is frantically re-balancing its bets.

Today should be no different.

The FOMC is expected to leave the Fed Funds Rate within its target range of 0.000-0.250 percent — the lowest it’s been in history.  However, it’s what the Fed says Wednesday that will matter more than what it does.

After the Fed’s last meeting in December, it made several observations:

1. The jobs market is getting “less worse”
2. The housing sector is making improvements
3. Financial markets are stabilizing further

The economy is gradually improving, the Fed told us, but there are still risks to the economy ahead.  Furthermore, inflation remains in check.

As compared to December’s press release, today’s FOMC statement will be closely watched. If the Fed changes its verbiage in any way that alludes to strong growth and/or inflation in 2010, expect mortgage rates in Ellijay to rise as Wall Street moves its money from bonds to stocks.

Conversely, reference to slower growth in 2010 should lead rates lower.

We can’t know what the Fed will say so if you’re floating a mortgage rate right now or wondering whether the time is right to lock, the safe approach would be to lock prior to 2:15 PM ET Wednesday. After that, what happens to rates is anyone’s guess.

Tags: Add new tag, Economy, Federal funds rate, Federal Open Market Committee, Federal Reserve System, FOMC, Inflation, Mortgage, Mortgage Rates, Wall Street

Written by Chad Lariscy//Discussion: Please leave a comment.

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January 14th, 2010Categories: Georgia Mountain Real Estate VIEWS

Mortgage rates are dropping this morning on weaker-than-expected Retail Sales data from December. Lower rates means more bang for your home-buying buck.

Excluding motor vehicles and parts, December’s “ex-auto” sales receipts were down roughly $500 million from November. Analysts had expected receipts to grow.

The relevance of Retail Sales to home affordability isn’t obvious, but it’s definitely logical.

Retail Sales is directly related to consumer spending and consumer spending accounts for the majority of the U.S. economy. When consumer spending slows, the economy often does, too. It leads investors to seek out “safe” investments.

It’s the reason why stock markets often drop on weak economic data — stocks are among the riskiest investment classes available.

Conversely, the best place to find safety is in the market of government-backed bonds.  This world includes products like U.S. Treasuries and many of the mortgage-backed bonds that help set mortgage rates for people all throughout the North Georgia Mountains.  Weak economic data puts mortgage bonds in demand.

For rate shopper, this is good news.  More demand for mortgage bonds causes mortgage rates to fall.  Mortgage rates are lower this morning because Wall Street is shedding some risk.

December’s Retail Sales report closes out a year of generally-weak data.  2009 marks just the second time that Retail Sales fell year-over-year since the government started tracking it 40 years ago.  The other year was 2008.

For home buyers in North Georgia Mountains and around the country, though, today may represent an opportune time to lock a mortgage rate.  Housing data is still improving and other economic indicators are showing strength.  Soon, Wall Street will shift from a “safe” mentality and move toward risk.

When it does, mortgage rates will rise.

Tags: Add new tag, Business, Market, Mortgage, Mortgage Rates, North Georgia Mountains, Real Estate, Retail Sales, Stock market, United States Economy, Wall Street

Written by Chad Lariscy//Discussion: Please leave a comment.

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January 12th, 2010Categories: Mortgage & Finance reVIEWS

Despite the headlines, it’s important to remember that December’s jobs report wasn’t all bad news.

Sure, the economy shed 85,000 jobs last month and the Unemployment Rate failed to dip below 10%, but for home buyers and rate shoppers in the North Georgia Mountains , the news was just fine.

The soft employment data led mortgage rates lower, making homes more affordable for buyers.

There is two sides to every economic coin.

Since early-2008, the U.S workforce has been closely tied to home financing. As the economy slowed and jobs were lost, Wall Streeters pulled money from the risky stock markets and moved it to of the relative safety of bond markets, instead.

Safe haven buying led mortgage bond prices higher which, in turn, caused rates to fall. Mortgage rates fell to 6 all-time lows in 2009. In a related statistic, 4.2 million jobs were lost last year.

And this is why Friday’s non-farm payrolls report was so good for buyers.

See, in November, the economy added new jobs for the first time since 2007, housing looked strong, consumer confidence was growing.  The safe haven buying reversed and mortgage rates took off.  Analysts believed the nation’s economic turnaround was complete.

But now, after December’s jobs report returned to the red, Wall Street is forced to rethink its position. Safe haven buying is back and mortgage rates are lower because of it.

Over the next few months, expect a lot of this back-and-forth action in rates. In general, positive news for the economy will be met with higher mortgage rates and negative economic news will be met with lower mortgage rates.  There will be exceptions, but the general rule should hold.

Tags: Add new tag, Business, Economy, Employment, Home Affordability, Mortgage, Mortgage Rates, Non-Farm Payrolls, Stock market, Unemployment, United States, Wall Street

Written by Chad Lariscy//Discussion: Please leave a comment.

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June 3rd, 2009Categories: Georgia Mountain Home Buyer's reVIEWS, Georgia Mountain Real Estate VIEWS, Mortgage & Finance reVIEWS

Most often referred to as just-plain “points”, discount points are an up-front fee charged by a mortgage lender in exchange for a lower mortgage rate.

The dollar value of one point is one percent on the loan size.  Discount points appear on Good Faith Estimates and HUD-1 Settlement Statements on Line 802.

Historically, each 1 point paid by a borrower lowers an offered interest rate by a quarter-percent.  Since the late-2008, however, this relationship is skewed.

Depending on market conditions, 1 point paid by a borrower can lower a mortgage rate by up to 0.875 percent.

As an example of how points work, a $200,000 home loan may be offered at 5.500 percent with 0 points.  With 1 discount point paid at closing — $2,000 – the mortgage rate may lower to 5.125 percent.

In addition to lowering your interest rate, discount points may be tax-deductible, too.  Therefore, be sure to provide your home settlement statements from the previous calendar year to your accountant during Tax Season.

I recommend calling Tracie Griffith with First Community Mortgage located in Blue Ridge, GA. Tracie has always taken very good care of my customers and clients lending needs. So, if you have any questions about a Home Loan, or further information on Discount Points, please give her a call at 706.632.5800. Please let her know you found her on “The Porch!”  Oh by the way, if you haven’t found that North Georgia Mountain Cabin, please Contact Me or give me a call at 706.994.8686 for all your Blue Ridge, Blairsville, Ellijay, or Hiawassee Real Estate needs. I would greatly appreciate it.

Make it a GREAT day!

Tags: Discount Points, Home Loans, Lending, Mortgage Rates

Written by Chad Lariscy//Discussion: Please leave a comment.

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