Posted by: msundermier | March 27, 2020

A Different Kind of March MADNESS!

We are living in a generational-defining moment. How we cope and change amid this COVID-19 pandemic will define humanity for years to come. While I hope we bounce back quickly, I fear we have a long road ahead; medically, socially & financially. Even then, “normal” will have a very different feel compared to life before the pandemic.

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On the economic front (the only front I really should dip a toe into on this blog), each week in March has seen unprecedented events, only to be outdone the very next week. It has truly been MARCH MADNESS!!! Mortgage rates, for example, hit their lowest levels ever on March 6th, but then saw rates climb faster than any other time in recent memory on March 13th. Then on March 19th, The Federal Reserve Bank began injecting a record amount of funds into the mortgage market to stabilize rates. Their intervention had positive effects for standard mortgages, but this week we are seeing irregular mortgage products (ie – Jumbo loans or alternative documentation loans) essentially vanish from lender’s rate sheets, terribly reminiscent of the 2008-2009 “mortgage melt-down” crisis.

It has been an astonishing roller coaster ride, & I’ve been recording short videos in recent weeks to keep clients up to date on these mortgage market developments (click here for the YouTube Playlist).

Today’s video (see below; complete with fun green-screen effects!!!) is a recap of some of the latest developments, most notably this week’s jobless claims and stimulus package details, and also a forecast of what to look for in the days and weeks ahead.

Here’s why I feel this is important insight for my clients. Over the last 40 years, every US economic recession has forced mortgage rates lower. Many folks argue COVID-19 will push us into a recession; how could it not!!?? This week’s unemployment claims figure of 3.3 million is nearly 5 times higher than the previous high, and our government is poised to pass a 2+ trillion dollar stimulus package, which may stop the bleeding but it alone will not turn the tide on this crisis. It’s very possible mortgage rates will push lower in the near future, so as a community we should be prepared for that opportunity.

But it’s not as simple as saying a recession automatically leads to lower mortgage rates. The mortgage market has tremendous hurdles currently facing it that could push rates higher. Either watch today’s Mortgage Market Video here, or keep reading below:

 

  • RISK of buying mortgage bonds has increased dramatically – With millions of people being laid off each week with no end in sight, investors of cufa4b2a71-31f3-41d1-b18c-d59fe7e2aad7rrent mortgage bonds are worried about higher delinquency and foreclosure rates. This withers away the value of their current investments, and makes them leery of purchasing more new ones. If you got food poisoning from eating at a particular restaurant, would you go back right away? That’s the dilemma facing mortgage bond buyers at the moment, and rates have to go up to lure them back.
  • Lenders are UNCERTAIN if they can sell new mortgages for a fair price – when we start a loan with you, we lock in the rate upfront with a bank. That bank has to then guess what the value of that mortgage will be on the open market when we close in 30-45 days. This is known as “hedging,” and the more volatile the market the more expensive it is for the banks to hedge. With unprecedented market swings, banks are spending a ton of money hedging their bets, and this cost gets passed on to you via higher mortgage rate offerings.  Some lenders are suspending locks until loans are underwriting, creating further problems and uncertainties for banks and borrowers.
  • Most lenders will have CAPACITY issues to handle a big surge of refi applications – With the unknowns of today’s economy, most banks are not looking to hire new staff. But, if mortgage rates drop dramatically they’ll need more staff to handle all of the new refinance applications OR take much longer to underwrite files. To keep a “governor” on the speed they receive new applications, banks may keep their rates artificially higher even though normal market conditions would suggest rates should be lower.

0c5067a2-878d-41c3-9d4a-fee88781e89aDue to RISK, UNCERTAINTY & CAPACITY issues, the current market requires a different game plan. In years past, if mortgage rates suddenly dropped I’d call as many clients as possible to jump on a refi application. In today’s environment, however, we have to be more pro-active. We need to have an application in place BEFORE the rate drop. Doing so allows us to serve more clients during those short windows when mortgage rates fall. And doing so gets you ahead of everyone else who is sitting on the sidelines. If your application is in & the underwriter has approved it, you’ll be in the front of the line for record low mortgage rates.

Will mortgage rates fall below 3%? I don’t know for sure. If the last few weeks have taught us anything it’s that nothing is for certain, but I’d like to spend my time & talents helping you to prepare for such an opportunity. If you’d like to discuss further your potential refinance goals, please get in touch with me. We’ll lay out a game plan, whether it be for a low rate, cash in your pocket, or a big reduction in your monthly payment. Let’s prioritize goals, gather needed application documentation, and work together to stay apprised of mortgage market developments.

Stay safe out in this world, and sane inside your cozy home!

Posted by: msundermier | March 11, 2020

Mortgage Rates Are in A Free-Fall, Right???

 

panicbutton2The last two weeks have been filled with dramatic headlines about our financial markets and global economy. The Fed had an emergency meeting, stock trading was halted for a brief period, and US government bond rates hit record lows. The markets have been in “panic” mode.  I’ve always said  mortgage rates improve when there is bad news, so mortgage rates are surely in a  free-fall, RIGHT???

In short, no. Mortgage rates don’t tend to move as quickly as other markets during extreme swings. For example, the rate on 10-yr US bond rates fell .42% last week while 30-yr mortgage rates fell only .08%. There are a number of reasons for this inconsistency, but the point worth making here is that mortgage rates are not in a free-fall…yet!

I believe mortgage rates will fall further in the near future, and last week’s volatility is a clear reminder of just how fragile our economic markets have become. We have spoken to a ton of clients in recent days, and most are deciding to wait for lower rates before taking action. I think this is a wise move for a number of reasons.

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The Mortgage Rate Roller-Coaster Ride is far from over!

First off, significant mortgage rate declines tend to lag behind other market movements. If the world economies and governments continue to grapple with the spread of Covid-19, it will give mortgage rates a chance to “catch-up” and fall further.

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It won’t take much of a punch to knock down our current financial markets.

Secondly, I believe the financial markets are fatigued and vulnerable to further volatility. Much like a heavyweight boxer in the twelfth-round, it doesn’t take much of a hit to knock out an exhausted fighter. The US Stock market has been on its longest “bull” run in history; it can’t go on forever. The recent market hysteria over the Covid-19 fears and of a potential price war in the oil markets prove it doesn’t take much for the current markets to get scared. I strongly believe the world’s financial markets are “on the ropes,” and the next knock-out punch will be coming soon.

Finally, it rarely pays off to chase markets. A few lucky clients did lock in great interest rates last week amidst the crazy market swings, but most of them had already been in previous conversations with us about a transaction. Thus far this week we’ve seen the markets “rebound” and give back much of the rates drops experienced last week. Rather than regret the missed opportunity of chasing last week’s market, I would advise everybody else to get ready to pounce on the next opportunity.   Luck favors the prepared, so begin discussions with us now about potential refinance goals. Doing so will allow us to monitor the markets for your particular situation, and swiftly act when the opportunity presents itself.

Please give me a call or email so we can set up a 10-minute phone appointment. I’ll be working nights and weekends as needed in the coming weeks, so I look forward to finding a time and method to communicate with you soon.

Posted by: msundermier | February 4, 2020

You Need To Know This

2019 was a remarkable year for our firm.  We exceeded every prior record our team set, from loans closed to homes sold.  We added three new team members, taking our total to over 10 for the first time ever.  We increased our office space.  And we achieved all of this while I was gone for over half of the year.

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For eight months I was on a sabbatical out of the country with my family. We sold our house and cars and lived on a sailboat in the Caribbean!  It was an incredible chapter in our lives, but this post is not about our adventures (visit @SV_Storymaker for that) . 

 

This is about the amazing team here at the office who made it all possible by caring for my clients while I was away.

f90dec07-34d3-4eaf-95e9-35d07b62f40cIts not easy for a small-business owner to take time away from their company.  If you ask other entrepreneurs, most would tell you they’ve never left for more than a couple of weeks, and even then were handcuffed to their cell phone just in case they were needed.  Its common for an owner to be needed; after all its their company!  Who else is going to handle the emergencies and tough decisions?

So how was I able to do it?  Preparation of and trust in our team.  This sabbatical was calculated for nearly a decade (watch this video for the backstory I shared prior to last year’s departure).

Every major life and business decision revolved around this singular goal of taking some extended time away with my family. As such, we were building a business that could survive without me.  My business partner of 8 years, Lisa Ferro, has built The Blue Waters Group with me and has the same principles instilled in her approach to our company and clients.  My support team of Donna Adams and Jennifer Perry have learned to do most facets of our job better than me, so I knew you were in safe hands.  And my wingman, Chris McGann, the one who was recruited in 2013 to fill my role during this eventual sabbatical, became an All-Star mortgage and real estate consultant proficient at replacing me to care for you.

Sure, there were marketing pieces that were sent to you on my behalf while I was away, but I was removed from the day-to-day operations.  I trusted my team because we prepared for this.  My cell phone stayed with my team while I was gone; I did not check my work email from remote locations.  I was not called upon when a transaction became complicated.    I was not needed.

I am forever grateful for my team who not only kept the business alive in 2019, but who made it thrive as never before.  I’m sharing this with you to remind you that what we do does not begin and end with me; the team approach to our services is what makes us great.  Take comfort in knowing there is a team behind me who is caring, capable, and committed to serving you in my absence, whether for a single phone call or an entire sailing season!

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Caring, Capable, Committed (& pretty darn Charming!) team at The Blue Waters Group

Posted by: msundermier | January 28, 2020

Tooting Our Horn

As a referral-based business, we let others do the bragging for us.  Our reputation has grown over the years through the praises of previous clients.  We are constantly in gratitude for the referrals that fuel our firm’s very existence.  Every now and then, however, we have to toot our own horn, if for no other reason to give you more reason to keep bragging about us to your friends, family & co-workers!

2020 5Star Logo Landscape

For the ninth year in a row, I have been recognized in February’s issue of Sacramento Magazine as a Five-Star Professional.  Moreover, I am the only person in the entire region who received the award as both a mortgage professional and real estate agent.

To give these awards credence, they are given by a research firm based in Minnesota called Five-Star Professional who conducts annual research on our market’s practitioners.  You can read about their methodology here.   Unlike the many “Best Of” voting contests where customers are encouraged to vote (often repeatedly!) for their favorites, the Five-Star awards are determined by third-party research, peer evaluations, and objective criteria.

Overlapping 1% pie charts

For the 2020 Class in Sacramento, 1% of the professionals in each researched category were selected.   It is an esteemed award to receive, as only 135 real estate agents and 27 mortgage professionals were recognized in Sacramento.  To set me apart, I was the only person recognized in both categories.

To compare it to an athletic feat, winning both Five-Star awards is like a baseball player winning both the Triple Crown and Gold Glove awards, suggesting they are equally great at offense and defense (no one has done this since 1967; can you guess who it was?).  The skills needed to hit and field a baseball are distinct, but both are crucial to winning the game. 

The dichotomy yet synergy of my combined careers are similar.  The talents needed to be an effective real estate agent are different than those of a mortgage professional, yet for my business both are essential to helping my clients through successful transactions.  It has been my career’s mission to excel at both disciplines.  I’ve had doubters & “haters” who claimed it couldn’t, or shouldn’t, be done.  Receiving these awards is a gratifying milestone at quieting the skeptics.

Historically, offering both services was a rare model but is now becoming a fad in our industry.  Big real estate firms such as ReMax and Redfin have branched out into offering mortgage services.  I’ve had years of honing our multi-disciplined craft; they have some catching up to do on the little yet mighty Blue Waters Group!

Thank you for your support and validation of our business model.  We look forward to building on these latest accolades, and continuing to be the trusted team you turn to for your mortgage AND real estate needs!

PS – I’m not done bragging!  In next week’s post, I need to tell you about some pretty awesome things about my team.  Until then, GO NINERS!!!

 

Posted by: msundermier | December 9, 2019

Stories in the Making

The stage is set this week to be an incredibly volatile one filled with newsworthy headlines.  These stories could have huge implications for mortgage rates.  Generally speaking, mortgage rates fall when economic indicators are sluggish or uncertain.  This week’s scheduled events could make markets very nervous and, depending on the outcomes, push rates lower.

Here is a list of stories in the making this week:

December 10thThe World Trade Organization (WTO) will cease to operate.  This multi-lateral trading system underpins 96% of global trade, but our American government has put a block on appointing new judges.  Two judges are retiring this week, so there will not be enough judges to hear new cases. While this event has been in the making for months (if not years), its significance is noted, especially given the rising trade war tensions around the world.  With no “sheriff in town,” the “gun-slinging cowboys” of global trade may feel brazen to impose stiffer trade rules and costs.

December 11thThe last Fed press conference of 2019.  After two back-to-back rate reductions in the Federal Funds rate, most analysts are expecting The Fed to not take any action in this week’s meeting. However, what they say in their press conference could have ripple effects through the world’s financial markets

December 12thBritish election that will shape the fate of Brexit.  A special election is being held on the hope that the Prime Minister’s party will win majority in their parliament.  If that takes place, the Conservative Party’s agenda, which includes a quick exit from the European Union, will forge ahead more swiftly.

December 15thNew round of tariffs set to take effect on $160,000,000,000 of Chinese goods (that’s a lot zeros!!!). With no sign of a written trade agreement between the two biggest economies on the globe, it is possible the next round of scheduled tariffs on Chinese imported goods will take effect.  While prior tariffs have targeted production materials, this tariff will directly apply to finished Chinese goods sold in America, including cell phones and other electronic and household products.  With less than a week to go, it is still uncertain if this latest tariff is a threat or a promise.  Its anybody’s guess how the next few days will play out in the financial markets, and its by far the most important story to follow in the coming days.

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Indeed, uncertainty is high, and I think there is potential for mortgage rates to fall in the days ahead.  Peek back at my August and October blog posts that share my thoughts on these story lines in the past, and give me a call if you want my forecast on whats ahead.

Posted by: msundermier | October 29, 2019

This should be illegal, but it’s NOT!

Whether you like it or not, your credit information is for saleI first blogged about this little known scandal over a decade ago, and it is worth revisiting as this issue has become more rampant than ever.  In my opinion, it should be illegal (it’s not!), but there is something you can do to fight back and protect your credit information from being sold to aggressive cold-callers!

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First a little back-story: under the Fair Credit Reporting Act, banks and other creditors can pay the credit reporting agencies (Equifax, Experian, and Trans Union) to be notified when a competitor pulls your credit report.  For example, you come to me seeking guidance and estimates for home finance options.  To provide you with accurate information, I ask the credit bureaus to compile a credit report for your transaction (a service I have to pay the bureaus for).  The credit bureaus then notify other mortgage firms that you are shopping for a home loan.  These other “professionals” also obtain your contact information, and proceed to call you tirelessly offering their services.

Let me repeat for emphasis: when you choose to do business with me you should expect dozens of cold-calls from other lenders the moment I pull your credit!  You never granted these companies permission to call you, yet its legal for them to know when and why your credit is pulled.

I equate it to this: imagine you go into your favorite furniture store to buy a new sofa.  After a store associate walks you around the store and points out a few options, you decide on your sofa.  Upon making your selection, hidden cameras within the store notify competing furniture stores that you are about to buy something.  Droves of salespeople from OTHER furniture stores immediately come rushing into your favorite store, aggressively offering sofas, beds, dining room tables and other furniture alternatives while you’re in line to pay for the sofa you’ve already selected.

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It may not be illegal, but its certainly an inappropriate practice!

Crazy, right??!!  Supporters of this practice defend it as capitalism at its finest. After all, if you’re shopping for a product isn’t it good to have options?  Yes, you should shop around, but you should do it on YOUR TERMS.  It is inappropriate for the credit reporting agencies to have the ability to sell your information to companies that you have no desire to hear from, particularly given their track record of keeping customer information secure (remember in 2017, Equifax had data of 143,000,000 consumers stolen by hackers)!

But there is something you can do to stop this harassing practice!  You can Opt-Out of these solicitations by visiting https://www.OptOutPreScreen.com/.  You can submit an electronic request that will stop these solicitations for 5 years, or submit a request by mail to permanently opt-out.  There is no cost to do so, and it takes 1-minute to complete the electronic option.  It may take 5 days for the request to take effect, so I recommend ALL clients complete this simple process ASAP.

If you’d like to take it a step further, you can register with the Direct Mail Association (small $2 processing fee required) to reduce all forms of solicitations, including email, catalogs and other “junk mail” offerings.  Lastly, you can register with the National Do Not Call Registry to remove your mobile and landlines from Telemarketing lists.

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Your credit information is valuable, and should not be shared with just any company willing to pay for it.  We hope you take the precautionary steps to protect it, and in doing so save some sanity by stopping unwanted solicitations.

Posted by: msundermier | October 28, 2019

Team Member Spotlight – Donna Adams

Donna is our most seasoned team member, having joined us the first year we opened our doors.  She immediately made an impact on how we handle transactions and, more importantly, how we care for clients.

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Her perfect combination of industry experience and warm personality is a perfect fit within The Blue Waters Group.  As she has many team responsibilities and the licensing to originate loans and sell homes, its likely she’ll be essentially involved the next time you need our team’s help.
Posted by: msundermier | October 17, 2019

I’ve Never Done THIS Before!

Over my career, I’ve referred to my thoughts on the markets as forecasts. For example, my yearly post about the market is titled the annual market forecast, and I’ve been known to compare timing the markets with forecasting the weather.

Today I’m taking it a step further; I’m going to make a bold prediction about where interest rates are heading. I’ve never been so daring in my career, but in doing so I’m hoping to get you prepared to take advantage of what I believe will be record low mortgage rates in the coming months.

If I’m going to make such a provocative declaration, I want to back it up with data. So, as a fair warning I’m going to show you some graphs. Don’t close your browser just yet; I promise to make it impactful and easy to follow (it may be easier to watch the video starting at 1:15).

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OK, here we go!  Above is a graph of the interest rates on 10-yr US Treasury Bonds. These rates are closely correlated to mortgage rates, so we’re just going to focus on the direction of the rates. As you can see, rates have been in mostly a free fall for the last year, and we’ve helped many clients in the last two months take advantage of these low rates. In fact, I’d like to focus on these recent two months where this jagged saw tooth action has been and show you where on this timeline our clients have been locking rates.

graph2Beginning in August, refinance clients began locking in their rates; each of these X’s indicate when one of my clients locked their loan. We were on a roll until just after Labor Day, and then rates took a big jump up on the announcement of a future meeting between US & China trade officials. During this volatile time, several clients submitted an application to refinance with us, but we recommended against locking in the hopes the markets over-reacted and would settle back down. That’s indeed what occurred, and we had a number of clients lock in their low rates in the “trough”. No one locked at the peak!

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Now history appears poised to repeat itself. For the last week, rates have been on a steep rise as verbal agreements were made in the widely anticipated trade meetings. The US and China economies are the two largest in the world, so easing tensions of a trade war is definitely good news. But, I think the markets are being overly optimistic. First off, none of the details of this trade agreement are in writing yet. That is supposed to be done over the next several weeks. Secondly, analysts say the agreements do not address some of the more critical issues of the trade tensions; this is being called simply Phase 1 of trade discussions. And thirdly, trade and tariff policies can be set unilaterally by a president in the name of national security. They can also be changed or removed unilaterally.

Bottom line, the trade war outlook is still uncertain, and when the markets figure that out then rates will fall. There are other factors at play that support my theory, and I’m happy to share them with you individually, but for fear of losing my audience I’m just cutting to the chase…mortgage rates are poised to fall. That is my bold prediction; and here is my strong recommendation; begin a refinance application now so you can be prepared to lock in a low rate if my prediction comes true. A trusted colleague of mine put it this way…if you go tailgating at a football game you don’t want to still be in the parking lot when the big play happens. Sure, the roar of the crowd will prompt you to make your way in, but by the time you get into the stadium you’ve missed the moment. Grabbing a low rate on a refinance is much the same; you need to be in your seat, watching the game in order to participate in the exciting plays.

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I can’t lock an interest rate until the needed paperwork to complete an application has been submitted. So, let’s do that now. If rates drop during the holidays do you really want to scramble to grab w2s and bank statements for me then? No, lets do it now. I’ll absorb any upfront application expenses for you, and if rates don’t drop we don’t need to complete the refi. There isn’t really any downside for you coming into the game: if my prediction is right you’ll get to celebrate with everyone on the field with a great refi rate, and if I’m wrong you’ll have a front-row seat to my crystal ball fumble.

Contact me so we can discuss ways we can make it easy for you to start your refinance application ahead of the next interest rate down turn.

Posted by: msundermier | October 16, 2019

Team Member Spotlight – Barry Harris

Barry joined our team in 2018 after working for a larger bank for many years.  He saw the value of working with an independent mortgage brokerage like us, and wanted to care for his clients with our teamwork approach.  Barry embodies all of the principles The Blue Waters Group holds paramount: honesty to all, commitment to clients, and excellence to his craft.

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We are fortunate Barry has become a member in our work family, and a representative of The Blue Waters Group in our community.

Posted by: msundermier | August 16, 2019

WAR. CURVES. DRAMA. A Story Line For a Refinance BOOM!

War. Curves. Drama.

These may sound like buzz words of a summer blockbuster, but they are the central themes of our current financial markets and why mortgage rates are in a free fall.

Trade WAR
Yield CURVES
Political DRAMA

All of these factors (scroll down for the backstory on each) are pushing mortgages rates to historic lows, and giving nearly EVERYONE a reason to consider refinancing. Yesterday I quoted a rate I don’t think I’ve ever been able to offer…2.875% (3.17% APR) on a 10-yr fixed loan. Yes, a fixed-rate mortgage under 3%!!!

I have spoken to many clients in recent weeks, but I haven’t had a chance to connect with everyone. Many of our clients are refinancing for a wide variety of reasons, such as:

Lower interest rates and monthly payments
Cash out to pay off credit cards or student loans
Cash for home improvements
Remove PMI or adjustable rate 2nd mortgages

If any of these scenarios sound like they may apply to your finances and we have not yet spoken, please reach out to me ASAP. I’ll be working through the weekend to be sure I help my clients take advantage of these rates before they change. My team and I promise to get back to you quickly with no-nonsense advice on your refinance options.

 

Trade WAR
USA and China trade war[1]_ US of America and chinese flags crashed containThe escalating tensions between the US and China have the global markets very concerned. If it costs more to trade goods between the world’s two largest economies, then less goods will be traded. This will slow spending, profits, and potentially lead the world into the next global recession. We are watching this story closely, particularly as it affects mortgage rates.

Yield CURVES
Typically, the longer you invest your money, the greater return you should expect on your investment. For example, putting your funds in a 5-yr Certificate of Deposit (CD) will typically have a higher return than a standard savings account. If illustrated on a graph curve, the return on your investment (also called a “yield”) line goes up the more time your money is invested.

Business man drawing a graph EDITEDThis is also generally true when investing in US government bonds (also called “T-Bills”), but there have been a few instances in the last 70 years where this graph becomes INVERTED, meaning a bond buyer actually realizes a higher return from a shorter-term bond. And EVERY time this bond yield curve has become inverted since 1969, the beginning of a financial recession has followed in the months after. On August 14th, 2019, this yield curve became inverted for the first time since 2007 (a year before the latest recession), and the 30-yr bond yield hit an all-time low. During recessions, mortgage rates tend to be lower, so the recent foreshadowing has pushed mortgage rates lower as well.

Political DRAMA
Our teammate, Chris McGann, recently said that President Trump has more influence on the financial markets than Federal Reserve Chairman Jerome Powell. He has a point; due to Twitter and 24/7 media outlets, the financial markets are aware of the President’s political agenda and personal diatribes on a constant basis. As arguably the world’s most powerful person, the President’s actions, ambitions, and tweets must be considered by the financial markets.

The “Trump Effect” however, may be losing its potency, as the markets seem to be accounting for the fact a tweet rarely becomes legislative policy. Regardless, the unreliability of the signals President Trump provides the markets make things uncertain. This uncertainty is leading to lower mortgage rates.

 

Bottom line: mortgage rates are low and they may fall lower if these factors continue to plague our financial markets. While this may be unpleasant for your retirement portfolio, it creates tremendous opportunities for refinancing your mortgage.  Call us to help you easily navigate your options.

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