Interest Rates

Friday, January 30, 2009

by The Applegate Team

Got a great email from a Lender friend in Buckhead and I wanted to share some of it with you. He is very in tune with what the banks are doing and his forcast for the market at the end of this week is as follows.


The flight to quality will remain in place for quite a while. Possibly six months maybe longer. What prompted the tightening was a semi-annual report published Tuesday. This report stated that delinquency rates spiked in the previous six months, for loans with borrowers having mid FICO scores of below 620. This in turn spooked investors who hold warehouse lines of credit for other investors. They will no longer tolerate any more of these loans on their books.

Rates have moved upward again. The 30 year fixed is now at 5.5% PAR for a 30 day lock. 10 and 15 year terms have moved to 5.25%, fully amortized.

3/1 and 5/1 ARM's still remain under the 5% threshold. 3/1 money is at 4.375% with the 5/1 ARM going to 4.75%.

He goes on to state that your debt to income ratios are going to become very important. That if you have credit card debt that you will not want to have more then 50% of the limit used.

Several banks here in town have just stopped doing mortgages. I know for a fact Atlantic Southern has and today I heard Security Bank announced they are putting a hold on all home mortgages.

It is a very unusual market that we are experiencing, and I really don't see a change coming for the next six months. So my advice would be to keep your credit stellar, don't be late on payments, and try and get your debt ratios down below that 50% mark. Typically the other industries like auto and credit follow suit on credit guidelines. So we may see changes in those markets as well.

As for the good new this Friday, home sales have risen and in the Warner Robins area we actually saw an increase of a little over 2%. So maybe all the doom and gloom is not going to be around for a whole lot longer.

Have a great weekend

Jacque Applegate

Thanks to Greg for the loan information.
Greg Brown

BuckHead Home Loans
1455 Old Alabama Road Suite 195-A
Roswell, Ga. 30076
Office: 404-303-7411
Cell: 678-943-0423
gbrown@buckheadhomeloans.com