Despite the latest hawkish tone that drove oil down and the dollar up last week, we’re seeing a new tone from analysts and traders who sent oil flying again on Monday. The dollar also retreated as many believe that the Fed cannot afford to raise rates, even by a quarter point before October. Mortgage rate markets have been little stirred by this news, but at times it takes a day or two to bake in these things making weekly trends better to follow. In any event, I stick by my 6% grab em if you can get em philosophy for the 30-year. Inflation is the beast that will need to be tamed in 2008 and the hawkish tone from the Fed will continue for the rest of the year, in my opinion. Again pay closest attention to the LIBOR rates.
I have a lot of people email me and ask about what is going on in California with mortgage rates and the real estate market. Unfortunately, I do not have a great idea as to what is going on with the real estate market in California as I have been out of there for a few years now. Moreover, from what I do know about the real estate market there (for investors and a homeowners) is that you can never lump California together and make any type of generalizations. This is one of the biggest problems that I have with mainstream media when they discuss the credit crisis. I would recommend finding original content blogs (not splogs) that discuss the market, like this one that discusses the San Gabriel valley.
Anxious real estate investors are wondering whether or not they will get another chance to open up 30 year fixed mortgages at 6% or less. Last week the fixed ended at 5.98%, but the Fed’s recent tone of rising interest rates has led the rates to boom to 6.19% for a 30-year fixed mortgage.
Personally, I am not sure if we will see 6% before we see 7%. My advice is for someone waiting on investments is to take 6% if we see it again. Of course, I am using national benchmarks as rates vary by location and credit score, but my general thesis is that if rates fall, it offers a good opportunity for debtors as interest rates are likely to rise for the rest of 2008.