Ok so I've recieved some phone calls about the fed and rates. My clients that are at 6 and above are ready to refinance and seem very in to what they see on TV. This is what I've explained to them lately.
The Fed does not matter when it comes to mortgage rates. What matters is who is buying the coupons and right now it's you and I. Simply put the whole mortgage market has come down to 3 players. Fannie, Freddie and FHA. The first two are currently owned by us.
We basically are there without the help of the fed. I can quote 4.875 today at a cost to the borrower. Most of my clients are familiar with pricing because I go to great lengths to make sure they understand how much I make for assisting them with the process of getting a Mortgage Loan. I always find it rewarding for them to understand why they should pay the point and get that rate down. Of course when appropriate I will guide them the other way.
One of the things that occured when the fed funds rate was low, was the borrowing of money by certain companies that lent that money out at much higher rates based on high risk. We called that sub-prime lending. I don't see it coming back soon. Right now credit is tight and Fannie and Freddie are not helping by charging a premium for lower fico scores. Hopefully they will loosen up a bit and we can go back to helping those that are not postal workers or public school teachers to get a loan.
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