Market Update (Guest Blog)

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Here is a great update on the housing market in San Diego with a focus on the issues we have all heard about in the sub-prime lending area. If you have any questions, be sure to contact Chris at Pacific Mortgage. Rather than try to paraphrase, I included it here verbatim.

To All,

What a crazy time for lenders. As you may have heard, subprime lenders are going under by the day and the repercussions are being felt throughout the entire mortgage industry. We're finding more and more buyers who were qualified are now not. This whole shakeup has cause all lenders to revamp their lending standards in order to generate mortgage loans that are marketable on the secondary mortgage market. From what we're experiencing here at PCM, the biggest changes are with 100% financing, increasing minimum credit score standards for qualifying, and more scrutiny with Alt-A lending (stated income, no ratio, no doc, stated income/stated assets, etc.) For now, the days of free flowing money from lenders has ceased. If you'd like to discuss this further, please give me a call.

Now on to the good news. Inflation in check, easing job market, slowing GDP, mortgage market issues, slowing national housing market, and an overbought stock market has helped push the 10 year bond yield to 4.49%. The bond yield briefly hit this level earlier this year and last December but we haven't seen it hold at this level since January 2006. Should bond yields hold or move lower, we can expect mortgage rates to do the same. We're still in that narrow band of 5.75% to 6.25% for all programs but rates are moving to the lower end of that range and I'm optimistic they'll remain there for the short term. There is still talk of if and when the FED will start to lower rates but that's all it is, 'talk'. Until the market data is continuously bearish for say 2-4 months, it's unlikely the FED will make a move.

Right now it's not a bad idea for borrowers to float their rate. As long as their loan officer has a handle on bond market tendencies, then that loan officer should be able to shield their client from market increases and possibly get them a lower rate if the market moves lower. Keep in mind too, with many sellers offering incentives, 5 year and 7 year ARMs can be bought down to the low to mid 5% range.

For more daily market updates, please visit my website at Ask Comer.

As always, I'll keep you posted.

Best Regards,
Chris Comer
Pacific Capital Mortgage
760-533-5174