0 Credit Crunch: Now with Extra Crunch

Over the summer we experienced a restriction in lending guidelines that moved most jumbo mortgages to a minimum of 20% equity requirement. Now the dominoes have really started to fall and within the last week we have seen many of our investors move to a minimum of 25-30% equity either for a refinance or a purchase loan in most major markets.

Remember these are for true jumbo mortgage borrowers above the conforming loan limit with stellar credit, ample savings and substantial provable income. What's the impact? I would expect to see continued price pressure on the luxury market as buyers wake up to an even more restrictive lending environment. It will continue to tighten or rates will increase(to compensate for risk) until the loans perform and the foreclosures slow. We still have lower down payment niche programs available within various markets but we fear that major moves by national investors will force others to tighten as well in their regional market. If you are considering refinancing I especially encourage you to evaluate your options now.

Detail: Credit Crunch: Now with Extra Crunch

0 Looking Back and Looking Ahead

On the wave of a two-day rally, mortgage rates improved last week overall. This despite a Friday reversal that had caused rates to tick higher just before weekend house-hunting began.
And, like so many other weeks this year, last week's mortgage market activity was defined by its quick-moving interest rates. At least one major mortgage lender issued 11 separate rates sheets between -- an average of more than 2 per day. Now, as an active mortgage rate shopper, you can't predict mortgage rate volatility but you can be prepared for it.
Start by knowing which mortgage product is the best fit for your long- and short-term financial goals and then be ready to pounce on a "good rate" because the rates expire as soon as that next rate sheet gets issued.

Another effective way to prepare for shopping is to watch for data that can influence the market's opinion of the U.S. economy. This week, there's a lot of it --starting with Tuesday's Consumer Confidence report. When confidence levels are high, economists expect Americans to spend more, propelling the economy forward towards inflation. Inflation makes mortgage rates rise.

Then, on Thursday, the Employment Cost Index data is released. This will be a closely-watched figure this month because it should show if American workers are pressuring employers for raises in light of higher gas and food prices. If wages are up, it will be considered inflationary because businesses eventually pass that cost back to consumers.

Again, bad for mortgage rates. And lastly, on Friday, the jobs report will be released. American businesses have shed jobs in each of the last 6 months, and June is expected to show the same. The jobs report's influence on mortgage rates is enormous so expect big rate swings Friday, either up or down.

Overall this week, considering the weight of the data, it may be prudent to finish-up rate shopping as soon as possible and get locked in with your lender. As the week progresses and the data's import grows, the markets should get less and less stable.

Jumbo Mortgage rates for July 29, 2008. Loan amounts up to $2,000,000:
3/1 ARM 5.875%
5/1 ARM 6.25%
7/1 ARM 6.50%
10/1 ARM 7.75%
30 Yr Fixed 7.875%

All rates offered to the borrower with 1 point cost. Rate quotes assume an owner occupied purchase transaction with a 25% down payment, 720 credit score, full income qualification and 12 months of verified reserves. Rates are subject to fluctuation. Custom jumbo loan rate quotes and rate lock advice are available by visiting www.thegreatloan.com

MORTGAGE RATE TREND:
Next 7 days: Slightly Lower
Next 30 days: Flat
Next 3 months: Higher

Detail: Looking Back and Looking Ahead