Dean Rizzi

Lower Rates Aren’t In The Bag
June 24, 2009 · · 4 Comments

Last week’s drop in mortgage rates was a welcome relief, and you would think that more relief should be forthcoming. After all, inflation appears to be a dead issue, given recent data on producer and consumer prices. Inflation and interest rates are highly correlated: When one falls, the other usually falls in tandem.

But there is more to the story than inflation. All interest rates are determined relative to risk-free market interest rates, with short-term Treasury bills serving as a proxy. But most interest rates are not risk-free. Mortgages rates are certainly not risk-free, which is why they are higher than Treasury bill rates. What’s more, mortgage rates are heavily influenced by rates on mortgage-backed securities (MBS). MBS rates, in turn, are heavily influenced by yields on Treasury bills, notes, and bonds.

And there is the rub. Treasury securities prices tumbled last week after Read more

Dean Rizzi

The Whole Picture
June 16, 2009 · · 6 Comments

Yes, mortgages rates have risen substantially over the past three weeks, and we can’t be sure when, or even if, they will come down. Mortgage rates are important, to be sure, but they are only part of the equation. Income and relative home prices matter too. On that front, average hourly wages continue to show incremental increases, while home prices continue to stabilize, and even rise, in many parts of the country.

Distinctions matter as well. Much has been made of the fact that lower interest rates mean more money in the pockets of borrowers. More money in the pockets of borrowers, in turn, means more money to spend to stimulate the economy. But let’s not forget that it’s a two-way street: The lender on the other end receives less income; thus, he has less income to spend. In other words, refinances with no equity extraction are really a wash in terms of aggregate demand for goods and services. Read more

Shokoofeh Nowbakht

My Happy First Time Home Buyers
March 22, 2009 · · 4 Comments

I went to visit my clients who just bought their first home 2 weeks ago. They had bought new dining set, living room set, and a flat screen TV over the fireplace. They were very happy and their little toddler boy had the greatest time running around the house, climbing over the couch and the dining table. He hugged me so many times and blew kisses at me. I enjoyed watching them. We were so used to meeting several times every week especially since the loan was getting approved and funded, that it was hard to say goodbye.

I’m going to miss not seeing them as often.happy-home

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