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Rates have held gains from last week and look steady for now. The beginning of the month is traditionally a time where rates get a bit stronger or maintain strength. Why? This time of the month is when lenders/servicers figure out how much liquidity they have for the upcoming months to purchase new long term debt (i.e. mortgages). Let's say that lenders had 100bn in mortgages prepay last month through sale or refinancing, they would now have 100 bn to reinvest in a new vehicle, such as more mortgages. So, as the calendar turns every month new money becomes available to purchase new investments. This is a SUPPORTIVE action for mortgage backed securities. Conversely, the end of the month is often tough as the allotted money has been spent at that point. Since we had a strong month end of August and we are heading into a new month that is surrounded by much uncertainty in the economy and markets, I feel very good about the fate of rates this week. Now time for my disclaimer : 4.875% has proven to be a very hard floor for rates this summer. We are currently resting on the floor, so it would be foolish for me to think that we will suddenly break a hard resistance point. It kind of reminds me of a time that I was in Vegas playing roulette, I was betting on black straight up and red kept coming up. I kept doubling up on black figuring that it has to hit eventually-after the little bouncy ball landed on red 11 times in a row and my small savings account was emptied (I was 22 yrs old) I learned a valuable lesson: There is no such thing as "being due", take your wins and walk away with them. How does this relate? We are BELOW 5% right now, that is a big win. If rates drop to 4% next month and you have already refinanced, you made the right decision. The only guarantee is what we have in hand, and that is a terrific interest rate.
P.S - If you have not looked at ARM's recently, check them out. Rates are available below 4% today. Check out my jumbo FHA streamline with no cost at 4.5%!
Looking to buy a home, check out this site for MLS listings.
Josh Burley
http://www.joshburley.net/
301.881.8900 x125
http://www.choicefinance.net/
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