WeeklyBasis 03/12/07: Global Stocks Take Hit on US Subprime

Fixed and ARM rates are exactly even after a roller-coaster two weeks since my last report on February 26. The day after that report was the day global stock markets crashed. Investors flocked to bonds which pushed rates down for about 2 days. We’ve since rebounded, but heavy loan defaults nationwide have taken their toll on the lending industry. The damage is mostly contained to the subprime lenders specializing in low or no down payment loans to people with poor credit. And since about $750 billion in ARMs will re-set during the rest of 2007, it’s possible we may see more lenders and brokers being forced to call it quits. This makes clients nervous, but brokers and Realtors who understand markets and investing enough to talk to clients about their long term financial plans (as opposed to just talking about single deals) will succeed even as all of this shakes out. As for this week, we’ve got critical inflation data Thursday and Friday, which will be the Fed’s last read before their rate-setting meeting next week. Bernanke is proving to be a steady hand, so we should all take a cue from him.

Conforming ($200,000 – $417,000) – NO POINTS
30 Year: 6.125% (6.265% APR)
10/1 ARM: 6.375% (6.515% APR)
5/1 ARM: 6.125% (6.275% APR)

Jumbo ($417,001 – $650,000) – NO POINTS
30 Year: 6.25% (6.39% APR)
10/1 ARM: 6.375% (6.515% APR)
5/1 ARM: 6.125% (6.275% APR)