The Latest on Lending

Time to bring in an expert... Matt Culp, Broker/Owner of Bainbridge Lendging Group, agreed to provide a lendign update for me to post today. If you have any questions or comments, feel free to post them and I can ask Matt to field them. Here is Matt's post:

"The Fed cut their rate again today by .5%. This puts the Fed Funds Rate at 1.0%, the lowest we have seen since the June 2003-June 2004 period. This cut follows the .5% cut made by the Fed on October 2nd. So, if you have a line of credit tied to Prime, that rate likely just dropped by .5%. Prime will now be at 4.0%. Do check your LOC paperwork to determine if the loan has a floor rate.

Mortgage Rates and the Bond market are basically flat today in response as the cut made today was pretty much baked in already. No big suprises in the Fed comments after the cut. However, they did not mention anything about inflation risks or pressures. This is good as often the absence of comments means something. This means rates can and perhaps should stay low for the foreseeable future in order to help the struggling economy and that the inflation pressure created by such low Fed rates will be minimal or non-existent. The Bond market and 10 year yield are good barometers of the future inflation risk. The yield today is hovering right around 3.80%. This is down slightly from yesterday but it had been down as low as 3.50% the day before the last Fed cut earlier this month. So mortgage and Bond rates are up a bit over the last few weeks as I have pointed out in prior emails. We are at 6.25% at 1 point on the 30 year fixed. That is about .375% higher than earlier in the month.

So, rates are still good, just in the upper region of the range we have been in the last 3 years or so. And lenders are still lending! By the way, the Stimulus Act Jumbo loan ($475k in Kitsap) is slated to go away at the end of December. Some lenders have put the funding cutoffs at the 12/1 or 12/15. Just wanted you to know this in case you have clients looking to use that loan and are trying to determine a closing date—either for a refi or a purchase. There will be a new “conforming” number to replace the current $417k and $475k after the 1st of the year, but that number will also be County based and we don’t know what it is yet.

Behind the scenes, technical numbers are improving, including the LIBOR which has come off its highs. This is an important rate for inter-bank lending and is an indicator of whether the credit freeze is thawing or not. It appears to be improving, so this is good from a big picture stand point. Hope this helps."

Matt Culp, J.D.Mortgage
Broker/Owner
Bainbridge Lending Group
LLC510-LO-27342
matt@blgloans.com