Mortgage Minute: When Warren Buffett Speaks, the Market Listens

Mortgage Backed Securities (MBS are what most closely drive home loan rates) ended the day mostly flat, but still down 3 basis points. This makes three days in a row that they could not break back above the 200 day moving average since Fridays big sell off after the non-farms payroll report came out showing job growth.

On the other hand, stocks had another record breaking day due in part to comments from Wall Street Guru Warren Buffett. He said that he was very happy with his stocks right now, and was bearish on mortgage bonds as they are at artificial levels and are only being supported by the Fed. This my friends is a very true statement and why I have been advising a locking stance for my clients as the risk of higher rates to come is still greater than the opportunity of better rates coming than what we have right now. And what we have right now are still some incredible rates! I remember when I first started doing loans in 1990, and I was refinancing people down to 9% and 8.75% and they thought it was fantastic. Historically, anything under 6% is an exceptional rate. The problem is that many of us (sometimes myself included) have a short term memory of where rates have been and get caught up worrying about missing out on an eighth of a point lower rate (which in our market averages about a $24.00 a month difference) only to see themselves lose a quarter or more in rate by not locking. 

I hope this does help some put things into perspective as i know how easy it is to get caught up in the "Rate Lock Roulette" hype.

Please watch the attached video to see where home loan rates are at today.If you would like to talk about your specific scenario or needs, please do not hesitate to call or email me directly.

This statement of current rates is not an offer to enter into an agreement for a loan at a specified interest rate, number of points or both. Current interest rates and discount points are subject to change at any time without notice to you. Stated rate examples were calculated using a $300,000 loan amount, 80% LTV and 720 Min Fico at the stated term lengths.  Licensed by the Dept. of Corporations under the CA Res. Mtg. Lending Act – 431-0421; Rates and charges in the advertisement do not apply to all loans made by the financial institution.

Rob McNelis
Loan Officer - NMLS# 830519
Direct: 619.279.6162
robm@summitmortgage.com
www.robmcnelis.com
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