Seattle Mortgage Rates Today, May 1, 2009
Seattle Mortgage Rates Today, May 1, 2009
The Federal Reserve has now purchased $400 Billion of the $1.2 Trillion set aside to purchase mortgages. This is a significant number moving forward which leaves approximately $90 Billion per month of buying power left to keep rates stable. Currently the market has paced at $4 Billion per business day. At the current levels it would be reduced to $3 Billion per day, leaving the market less than 7 months left. How will this affect rates? The Federal Reserve has been successful thus far to stabilize interest rates and keeping them at historical levels of 5% or less. Where the initiative is coming up short is on the Home Affordable Program which was set out to assist home owners who had 20% or more equity before the market crash and now have little to no equity in the current market. Yes the Home Affordable Program is working but with so many home owners having second mortgages, now leaving them helpless because the second mortgage companies are not willing to re-sobordinate their positions. Yes you can refinance up to 105% loan to value BUT if you have a second mortgage it is up to their approval if you can proceed and in many cases we are seeing this being a major hurdle. At least at this point.
The good news more and more home owners are finding that their loans have been purchased by Fannie or Freddie allowing them to qualify for the Refinance program. Keep checking on a daily basis because we recently had a client on Monday not qualify and on Friday has now qualified. With so many modifications coming from the Obama administration there could be more changes to come that will support current home owners.
Here is some serious food for thought for current and future home owners, this week the Economic Cycle Research Institute said that the current recession and longest post war will probably end by the end of summer. If this is true which we would all like to think in optimism, could impact rates and further prove interest rates have hit their bottom levels. It still has yet to be seen if the Federal Reserve will purchase mortgage backed securities at the 3.5% levels which is really the only indication rates may move lower. With this all said TIMING again will be key for new and current home owners. Many are still waiting for rates to move lower, now the question has to be asked why and what proof do you have.
Why? If home owners continue to wait and then rate do begin to increase slowly due to the turn in the economy and the reduction of buying power of the Federal Reserve rates will inevitably move higher. This is truly the time over the months to come to refinance and adjust cash flow. Inflation will return, it is no longer a question of if, it is when, and we all know what it was like in the peak of the inflation how much it hurt at the gas pumps. This is why it is so critical to have cash flow in the home owners budget in place now while opportunities to save are available.
Proof? Don’t believe advertisement from lenders who say rates are still going lower. Where is the proof? Lets be brutally honest, banks are not in control of rates if Fannie and Freddie are backed by the Federal Reserve. The Federal Reserve is clearly in drivers seat right now. There are no lenders healthy enough to boast rates of 4.00% or lower. IF (BIG IF) They were that healthy you would hear about them in the media, that is real, the financial sector is still a big question mark with the results of the stress test still out for a verdict.
Bottom line be smart with your largest investment, your home. Prepare for the future, adjust your cash flow and purchase wisely within reason of your budget. Stay tuned as we will for sure have more news next week with the stress test results and the employment numbers impacting the market.