FHA Mortgage Rates (Nov 21)

FHA Mortgage Recommendation: 30 year fixed rates are already pretty attractive right now, and it’s appearing that they might go even lower. Over the past 16 years I have help individuals understand the difference between the 10 year note and mortgage bonds.

Just two days ago the 10 Year Note had risen by 285 basis points… while Mortgage Bonds rose 12 basis points. I’m sure you are saying to yourself what does this mean for me?

Let me help you understand, but first let me explain what happened. The Fed minutes from the October Fed meeting was released. The minutes basically expressed some concerns over the health of the economy. Their future predictions or targets for employment and growth were lowered.

After many years of being concerned with inflation… Now the feds are concerned about deflation. This news has shocked the financial markets, which pushed Stocks lower and directed money flow into an ultra Safe treasury note.

Deflation is when prices drop, due to increases in money supply and credit. And we are definitely seeing problems with credit right now… and with the economy slowing, we are hearing some people say we are in a deflationary recession.

In a deflationary environment, investors flee into fixed instruments like bonds because the fixed payment received would actually buy them more goods and services over time.

If you can recall, back in the Spring of 2003, Alan Greenspan mentioned a deflationary recession and mortgage bonds rallied 400 basis points in a couple of weeks, which sparked a refinance boom.

But things are much different right now, but stay tuned, should more investors wake up to the value of Mortgage Bonds, we could see an improvement in FHA mortgage rates.

So get ready now, all refinance booms have a limited timeframe. And this time will certainly be more challenging as there are fewer programs with stricter guidelines, but can you guess what the biggest hurdle of all is going to be? You guessed it, property values.

Please keep in mind that with the new government stimulus package combined with several other solutions, we can help most people refinance even if they owe more than what their property is currently worth.

Mortgage Bond prices have barely peaked above the 200 day moving average. We will continue to float our FHA mortgage rates, but be mindful that things can change quickly. And a reminder about 2003, when Alan Greenspan can back later and said there is no threat to deflation, the refi boom quickly ended and rates shot up dramatically higher.

Stay tuned we are living history.