Good News Friday Podcast
Week 12
March 21, 2008
(4 Minutes and 39 Seconds.)
Hello and Welcome to Good News Friday! Today is Friday March 21, 2008. My name is Bruce Karasik.
Each week we bring you good news and positive developments in the Real Estate Market, Mortgage Market, in our economy and our country. If you miss any podcast, we have archived all or our past shows so you can listen to them at any time by going to www.GoodNewsFriday.com.
This week the Federal Reserve Board lowered the Federal Funds Rate by three quarters of a point to 2.25 percent in effort to stimulate the economy and the housing market. This rate is the rate that banks are charged when they borrow money. So now we have an equivalent drop in the prime rate, which has been reduced to 5.25%. The drop in these short term rates do not mean that an equivalent drop will take place in Mortgage Rates. This, however, will have a direct effect on car loans, home equity lines of credit, and credit card rates.
The mortgage rates are more affected by economic news, than reductions in short term rates. However, fears of inflation can increase mortgage rates. When the Fed cuts short-term rates, the intent is to lower borrowing costs for corporations so that they'll invest and hire. But this economic growth can lead to inflation. That in turn leads bond traders to demand higher rates on their long-term bonds - and that drives up mortgage rates too. So the Fed decided to encourage the banks to lower their long term rates by making more capital available. An additional $200 billion in financing is headed to the battered mortgage markets after federal regulators said they would allow finance giants Fannie Mae and Freddie Mac to reduce the capital they keep on hand.
Fannie (FNM) and Freddie (FRE, Fortune 500) are two publicly-traded companies set up by the federal government nearly 40 years ago to help provide financing needed by lenders looking to make home loans. With the change, they are expected to buy or guarantee $2 trillion in mortgages. That is about $200 billion more than they would have without the rule changes announced Wednesday. This additional liquidity is intended to make more money available to banks so they can make loans to the public. However to date, the banks however have been slow to release this money.
So this week the stock market was up one day and down the other. There is tremendous volatility in the mortgage Market and so it is really important for you to call us and let us help you determine when the best time is to lock your interest rates either for a refinance for existing purchase. It would be a smart idea to get your loan applications in now so when the rates dip we are ready to lock you at the right time.
Now more than ever it is important to contact a real professional to get the best advice. So call me or email and I will be happy to talk with you on how these new developments can help you save money when you buy your home this year or refinance at the new lower rates.
The key to success is having the right advisers and consultants in place so you can have the right strategy. As your trusted Real Estate consultants and advisers, we at the Karasik Team work in our unique ability. My unique ability is consulting, negotiating and overseeing the transaction details. We take a customized approach and enable our clients to make informed decisions to accumulate wealth through Real Estate. In addition, we at Karasik and Associates, Mortgage Consultants can help you come up with a strategy to determine whether this is the right time for you to buy your first home or to refinance your existing home.
We continue to believe that homeownership will remain to be the best avenue for American families to secure their financial future. I look forward our continuing dialog and we invite your feedback. Please feel free to email me at Bruce@TheKarasikTeam.com, call me at my office at 805-267-0366, or you can post your responses on our blog at www.GoodNewsFriday.com.
So we do have some good news to be grateful for. And so, my friends, I wish you and your families a Happy, Healthy, and Prosperous week. And that’s it for now. I’ll see you back here next week for another episode of Good News Friday!
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