West Palm Beach mortgage, Boynton Beach , FL home loans, real estate loans, home finance information – Todd Dawkins, www.MortgageCreditCare.com

Florida Housing Market

November 2008 Newsletter

December 27th, 2010 5:36 PM

Market Update

Wicked, foul, heartless, vile, defective, disturbing, awful, atrocious and lousy are all words, according to my pocket thesaurus (2nd edition), that describe the state of the U.S. and global economy over the past months.

I'm so sick of hearing how bad the economy is that I don't feel like writing about it! The scary part, in my opinion, is that we are still only in the 2nd quarter of this game. We have not seen capitulation in the stock markets yet and I believe we are still looking for a bottom. I hope the 3rd quarter comes soon.

Stay Tuned,
Todd Dawkins

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The Anatomy of a Rate Lock

I thought it might be interesting to show a live example of what I do to lock in the lowest interest rate for my clients. The following are emails I sent last week to a prospective client who was Concerned about getting the best interest rate for a home he is purchasing. He was rate shopping trying to compare rates from different lenders.

The following charts and emails are in chronological order.

Nice speaking with you today!

I have attached the FANNE MAE 6.0% 30yr bond chart for you to look at. What I was going to tell you before we hung up was that even though rates are 6.375% right now I would not lock you in at this level anyway.

Look at the bond chart I have attached and you will see we are at the lower range of the bonds current trading range. On this chart when the bond goes UP corresponding 30 year fixed interest rates go DOWN. Conversely when the bond goes DOWN interest rates go UP.

You will also see the stochastics are in an over sold position giving more probability of interest rates coming down at least in the short term. I would be looking for the bond to go up and test the resistance levels marked R1 and R2. We want to see the bonds rally above this first level of resistance. If it does, I would be looking for it to test the blue line, the 200 day moving average.

I would have my finger on the proverbial trigger at this point in order to lock before any downward move in the bond to protect your interest rate. At this level you could see a .125 to a .25 improvement in rate. If we get lucky and the news is on our side we could test the upper limits of the current trading range of 5.75% to 5.875%. Of course I will keep you posted whenever there is any significant moves.

What the rate is today is really a mute point as you can see from the bond chart.
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What a difference a day makes.

The bond had one of it's best moves of the year today, up 109 BP. Check out the attachment of the bond chart. The bond went up and closed at it's 200 day moving average. Hopefully it will have enough legs to break above this resistance level.

I priced you out today and we can get you 6.125% with NO points! I personally think we will see more improvement in the rate but the window to catch the best rates is only a few hours sometimes.

With my technology I'm sure I can lock in the best rate for you. My biggest fear is that the rates peak to early for your closing. I forwarded a pre-qual letter to the selling Real Estate agent this morning.

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The bond is behaving just like I was hoping it would! I could lock you in today at 6% with a 45 day lock , No points!!

You need to get back with me, it might be smart to lock this loan right here to protect any downside risk. I do this in these situations knowing that if rates get better I can always place the loan with another lender so as not to lose any downward moves in the interest rate while at the same time locking in this .375% in interest rate.

This is usually where I have my finger on the trigger. If you look at today's chart you will see we had a nice move and close above the 200 day moving average. What concerns me is where the bond stopped. By looking at the chart you can see that the bond is still in a downward pattern, even with this nice move over the past two days. You can see this by drawing an imaginary line from the highest point on the left across the tops to where the bond's high of today.

In other words this could be the best rates available right now. Hopefully the bond will break out of this downward pattern right here and we could see interest rates under 6%.

One thing we got going for us right now that could continue to push the bond higher is the employment numbers that come out on Friday. The ADP numbers came out today and showed the job loss higher than expected with 157,000 jobs lost in October. This is what helped the bonds move higher today. The official #s come out Friday and are historically worse than the less accurate ADP #s so this could be the catalyst to cause the bond to move higher and break out of this downward pattern that I see.
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The very first Bond Chart at the top of the page is the latest from Friday Nov. 14th. As you can see we have yet to break out of this down pattern and rates gotten worse by .125%

To Your Financial Health,
Todd Dawkins

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Funny Bone

Monkey Business on Wall Street

"Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for $10 each. The villagers seeing that there were many monkeys around, went out to the forest and started catching them.

The man bought thousands at $10 and, as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy monkeys at $20 each. This renewed the efforts of the villagers and they started catching monkeys again.

Soon the supply diminished even further and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so scarce it was an effort to even find a monkey, let alone catch it! The man now announced that he would buy monkeys at $50 each! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.

In the absence of the man, the assistant told the villagers. "Look at all these monkeys in the big cage that the man has already collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each." The villagers rounded up with all their savings and bought all the monkeys.

Then they never saw the man nor his assistant again, only lots and lots of monkeys! Now you have a better understanding of how the stock market works."

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Parody of the Real Estate Downfall

http://www.youtube.com/watch?v=bNmcf4Y3lGM

Posted by Todd Dawkins on December 27th, 2010 5:36 PMPost a Comment (0)

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