Are People Beginning to Realize What I've Been Saying All Along?

For the past three days mortgage rates have been as stable as Lindsey Lohan's love life. Banks and lenders are quoting obsurd rates, "Rates as low as 4.25%" or "4.75% no point/no closing". Why didn't you hear about it? Because the window of opportunity was about 15 minutes (possibly an exaggeration, but really it was a matter of a couple hours at most). Rates shoppers must be going nuts in this market. Hoping to get the best rate via shopping in this market is like be a Detriot Lions fan and hoping for a Superbowl win next year. It won't happen!

There are several reasons rates have not come down, and may not at all. First, the dollar is falling faster than Chris Brown's career. In turn, the falling dollar will pull mortgage rates up. Mortgage companies cut staff (personally we eliminated 75% of our contacts in the industry) and now that business has picked up these companies cannot keep up. As a result, lenders and banks artificially increase rates to avoid new loans and "catch up". The end result: the consumer pays the price. You may be saying "well why can't they just hire more people?" Many people have left the industry altogether and there is a certain level of expertise involved, otherwise having extra bodies just slows an operation down even more!

I would love to see 4.5% rates more than anybody, but lenders can't keep up. Anticipate dramatic fluctuations over the next couple months, followed by a period of inflation. Rates will eventually reach 6.5-7.0% when inflation peaks in the next couple years. I heard a saying a few days ago, "Pigs get fat, but Hogs get slaughtered". Don't be hog, take the best you can get before you miss the boat and get slaughted by 6.5% rates!

Have a great weekend!

Check out this Boston.com article that explains why rates have not, and potential will not, drop much more than the current levels:
http://www.boston.com/business/articles/2009/03/20/swamped_lenders_hold_steady/