Written By — Chad Emerson
It has been a crazy up and down week as far as the mortgage-backed securities are concerned. This weeks up and down action resembled something out of a ‘Rocky Movie’. You have the mortgage-backed securities resembling Rocky getting pummeled for two days straight by the Dow Jones, who we’ll refer to as Apollo. Investors and forecasters were sure that this was signaling the potential end of the historically low rates that we have all been enjoying for some time. The MBS were being dropped to the canvas quicker than you can say profit-taking. But amazingly and predictably enough, Rocky (MBS mind you), finds the strength to summon up a flurry and punch it’s way out of defeat and gain the upper hand. So how did this all happen?
Part of it could have been the brass knuckles insides Rocky’s gloves…The labor department had more bad news that first time unemployment benefits seekers rose by 14,000 to an adjusted 500,000. Again this was all too predictable, and was just enough to send investors scurrying for a safe place to store their “cheese”, and of course the safest place for an investor to store their “cheese” is in the safe haven of treasuries and mortgage-backed securities until the dust settles.
Analogies out of the way, this has most certainly caught the attention of Big Ben Bernanke and the Obama administration, and I’m sure they’re already looking at additional stimulus plans to jump start the economy again. Who knows how this will end up, but there are a couple of things I would like everyone to consider, and again this is strictly only my opinion.
We need to watch the Dow very carefully because as you all know, this is the last hurrah for the Bush tax cuts, as next year, big business, and publicly owned companies are going to experience higher taxes and the government taking a bigger bite out of their profits in 2011. Wouldn’t it make sense for said companies to report their biggest profits and growth in 2010 than in a certainly higher tax laded 2011? If the Dow closes up over 10,800 in the near future, that could certainly mark the end of Rocky’s career and the resurgence of the Dow into 11,000 land. But it wouldn’t surprise me to see just the opposite happen, not much surprises me anymore. So what does all this mean to the investors?? Get in while the getting’ is good! Don’t wait too long, or you may miss the boat all together. This is certainly going to get interesting as the final 4 months of the year is shaping up to be a potentially crazy finish.
O.K. I’ve talked long enough, onto the rates for this week:
Investor Rates for purchase, 20% down: 5.125%, Same for duplex with 25% down as always.
I have been receiving numerous requests for refinances of investment property as of late, and please keep in mind that if you have 5 or more properties with financing on them, but at 10 or less, we can help you refinance the rate and term, by doing a direct-sale to Fannie Mae as they are the only investor who will purchase these loans. But you cannot cash-out your equity as Fannie Mae does not permit cash out. Now if you have 4 or fewer properties with financing, you don’t have to abide by that, as we are allowed to ‘in-house’ finance you.
Secondly, if you have the 5-10 and are looking to refinance just the rate and/or term, also keep in mind that it is not 75% loan to value, as is the case with our current LTV basis, it is in fact 5% less with Fannie Mae on 1-4 unit properties, so it will be limited to 70%.
I hope everyone has a great weekend, and let me know if I can help. You may contact me here.
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