Mortgage News that Matters

According to MarketWatch, "Sales of new homes in the United States fell to a 13-year low in February, dropping 1.3% to a seasonally adjusted annual rate of 590,000, the Commerce Department estimated Wednesday. Sales have fallen four months in a row and are off about 30% in the past year. The number of homes on the market dropped by 2.1% to 471,000, the lowest since July 2005, an indication that builders are trying to work off their bloated inventories of unsold homes. The inventory represented a 9.8-month supply at the February sales rate, unchanged from January and the highest since 1981. The median sales price fell 2.7% in the past year to $244,100."

This sounds bad, and for the most part it isn't great news. However, until we can get the "bloated inventories of unsold homes" off of the market, we won't see real improvement. Builders are still sitting on homes they started before the credit crunch when it was easy to get a loan. Now, they are faced with unsold properties, paranoid borrowers (or bargain seekers) and construction loans now due. Many are still holding out for sales prices that they easily could have received last summer.

Once we get to a healthy level of homes for sale, both new and existing construction, we will see prices stabilize and a "normal" market.

In Oregon, we're lucky, existing homes are still appreciating in most markets.

According to MarketWatch, J.P. Morgan Chase & Co. reportedly has agreed to buy Bear Stearns Cos. for $2 a share in a stock-swap deal.  Evidently the set price will be $2 per share. It appears that both boards have approved the sale and are trying to put it together prior to Monday's Asian market opening.

Get ready for a rough Monday. The markets will not like this. It has the possibility of sending Mortgage Rates much lower since they generally move in the opposite direction of the Stock Market. However, since Bear Stearns is a strong player in the mortgage industry, Mortgage Backed Securities might not like it either.

While it's curious that a couple of days after a Fed bailout they are selling at a bargain, the "loan" was for only 30 days. Who knows what pressure the Fed put on them for a quick resolution to stabilize the markets. It will be interesting to follow.

Since we ended Friday in a nice position for Mortgage Rates, it might be prudent to lock rates tonight if you have a lender who allows weekend locks. If not, get ready for an interesting day!

Larry Morris is a Certified Mortgage Planning Specialist (CMPS) with Equipoint Financial Network in Newberg, Oregon. He specializes in financing for Senior Citizens and Rural Properties. He can be reached at larry.morris@equipoint.com. His website is www.PDX-Mortgage.com.

This material is copy protected 2008 by Larry Morris, Mortgage News that Matters. All Rights Reserved His opinions do not necessarily represent the views of Equipoint Financial Network.

I posted a blog yesterday on Activerain, a social networking site geared towards Real Estate on the above subject. It was interesting.

Click on the following for more information:

Are You Committing Fraud With Seller Paid Concessions? Pt 2

Are You Committing Fraud With Seller Paid Concessions?