Florida Mortgage Update

1. Fed Meeting June 24-25 Much discussion about inflation and a rousing debate regarding the presence of recession.
2. No change in Fed Rate Heightened volatility in the financial market over concerns of the Countrywide-Bank Of America.
3. Mortgage Application Volume to increase.
4. Long Term Rates To Remain Flat Or Slight Increase.
5. Loan Programs To Loosen Up Slightly.

• The Fed appears to have completed their action plan to stabilize our economy through artificial means. Many experts sense that the Fed now feels that the market should be given time to perform on its own and adjust through its competitive nature. Lowering short term rates has eased the burden of adjusting loans, and the stimulus packages have allowed many consumers to exhale for a short time.
• The mergers and acquisitions slated to occur in the 3rd quarter are upon us. There will be unrest until the CW-BOA acquisition occurs. Its completion will allow for some relief to a beleaguered industry and aid a gradual but steady restoration of consumer confidence in this sector. I cannot envision this deal not happening. I do believe that the Fed may be pressured to help out in a "Bear Stearns-esque way" . CW is trading well below the adjusted price BOA may choose, despite repeated denials, to seek to lower the offer. That "lowering" may appear in some form of relief or guarantees for BOA from the Fed,as opposed to less cash for CW shareholders.
• Mortgage Volume Will Increase. Its summer and home sales should be up. FHA and VA loans will continue to be a favorite choice for many buyers. There will also be an increase in FNMA loans, as the "declining values" situation comes to an end, and buyers will be able to qualify for conventional 3% or 5% down payment loans.
• Rates have been very good for a long time, and should stay that way. Lowering of short term rates has not lowered long term rates significantly. Rates continue to wander up and down with the ebbs and flows of the financial and bond markets. There may be a slight rise due to domestic inflationary pressure as well as growing concerns overseas. Any increase would not be likely to deter home buyers as it would be minimal.
• Loan programs will benefit from the end of "declining values" on FNMA loans. 100% finance through the VA is one of only a scant few ways to achieve a true 100% loan. I would not anticipate a dramatic change in qualifying criteria, but as mergers occur, there may be greater opportunity for portfolio loans. This could allow for some exceptions for well qualified buyers that are not currently available. If a buyer is not well qualified, or desires a "less than full documentation loan" I would not be as optimistic.

Written by Ron Wysocarski at First Horizon Home Loans. For a Port Orange home or Daytona Beach condo loan, call Ron @ First Horizon Loans 386-562-2651.