A word from Met Life

January was an excellent month for mortgages as far as rates went. However, with volume that accellerated at an unprecendented pace due to the government intervention in the mortgage backed security market lenders felt themselves overloaded and raised rates to control volume towards the end of the month. However, even with the "higher" rates we still finished around 4.75% on the conforming and around 5% on the FHA 30yr fixed.
The market we are working in is best described as a "contrived" one. We wouldn't be here without the federal government using bail-out funds to purchase MBS's(mortgage backed securities). This intervention is scheduled from January-June. I imagine the powers that be will re-assess towards the June if any furthur intervention will be needed. The point of this is that buyers need to be made to understand that this is a once in a lifetime opportunity. The lowest rates ever plus low purchase prices equal something we will probably never see again. We have some print material showing this if any of the sales agents would like something to use to educate clients.
Another thing you are probably hearing is "We are waiting for rates to go lower". Don't hold your breath! At this point the secondary market isn't set up for sub-4% rates. There is no actively traded sub-4% MBS coupon so there is no way for lenders to replenish their pipelines if they sell a sub-4% rate. If this changes, then maybe we will see a lower rate, but I still wouldn't wait for it.
We are finally seeing purchase inquiries pick up as the rates stay low for this extended period. The more we can get the word out of how this is a unique opportunity the more purchase business we will see.

Some numbers-

At a $200,000 loan amount-
5%=$1073/month P&I
6%= $1199/month P&I A $126/month difference. (And 6% is still a historically low rate.)

To make the some payment ($1073) at 6% the loan amount would have to be $179,000. That 1% rate drop is worth 10% in buying power! That is over $20,000 in "free" money and it's not going to be around forever!!

If you need a flyer showing this example to buyers please contact one of the Metlife loan officers.




Thanks for letting all of us be a part of your team. We look forward to being a part of your success!

Giles Rebholz
Timothy Ostrom
Deak Allison
Jarod Wallace