Fed Surprises with Deepest Cut since 1984

The Federal Reserve surprised everyone Tuesday with an emergency intersession rate cut of .75%, the deepest cut in the Fed Funds Rate since 1984. The Fed Governors are acting in direct response to recent reports that the country is on the brink of recession.
If you have credit cards, auto loans, HELOCs, or an Adjustable Rate Mortgage, the Fed's decision to cut this key interest rate is great news. For long-term mortgage rates however, this could signal the beginning of the end for the lowest 30-year home loan rate borrowers have experienced since 2005.

Let's look at the impact of a few recent Fed Funds Rate cuts and the corresponding impact to home loan rates to see what this could mean for you:

Period Fed Funds Rate Cut Impact to Home Loan Rates
Jan. to June 2001 Down 2.25% Rose 0.10%
Oct. to Dec. 2001 Down 0.75% Rose 0.45%
May to Aug. 2003 Down 0.25% Rose 0.78%

Rates are predicted to be cut again when the Federal Reserve meets at the end of this month. Many believe Tuesday's action was taken because of a dramatic downturn in the stock market, where the Dow dropped 464 points, the worst single day drop since September 11, 2001. Since the Fed's announcement, the Dow has recovered much of those losses but volatility is likely to remain a consistent theme throughout the week.

If you are waiting for long-term mortgage rates to fall further from here, don't count on it. Your best chance to lock in the lowest mortgage rates since 2005 is now. Getting your application in process will allow you to capture a rate near all time lows and, with many experts predicting home values could continue to decline, waiting could kill your chance to capture a great rate if your home doesn't appraise.

This is an unprecedented market and things are moving fast. We have many lenders that we work with and could put you in contact with if you are looking to buy or refinance.

Dallas-Fort Worth home prices least likely to drop

The Dallas Morning News ran a great article Wednesday morning regarding Dallas housing prices. The study from the PMI Group, the mortgage insurance firm that decides whether risky loans will be insured, states that the Dallas/Ft Worth Metroplex is the least risky market in the United States and should continue to have stable home prices in 2008-2009. This article is great news for buyers and for sellers.

Report: Dallas-Fort Worth home prices least likely to drop
07:30 AM CST on Wednesday, January 16, 2008
By STEVE BROWN / The Dallas Morning News stevebrown@dallasnews.com

Dallas-Fort Worth's housing market is the least likely of any in the country to see a decrease in home values, a new report confirms.

At the same time, the chances of a house price decline rose in almost four out of five U.S. markets, according to a report released Tuesday by mortgage insurance firm PMI Group.
Dallas and Fort Worth ranked dead last in PMI Group's latest forecast of cities with the biggest chance for a home price shakeout.

Analysts with the California-based company estimate that Dallas-Fort Worth has less than a 1 percent chance of marked home price drops in the next two years.
By comparison, cities in California, Nevada and Arizona have more than an 80 percent likelihood of falling residential values.

"We're seeing an increasingly polarized market," PMI economist David Berson said in a news release.

"The risk that home prices will be lower in two years has increased for many of the largest cities in the nation, although areas that saw only moderate home price gains during the 2002-to-2005 period still generally have low risks of price declines," he said.

That's certainly the case in Dallas-Fort Worth, where home price appreciation during the last five years has been a fraction of the national average.

"Because Texas did not participate in the double-digit home price gains in the first half of the decade, it doesn't have to take the great pain of the areas that are compensating for that now," Mr. Berson said in an interview.

Now that the housing sector is in a slump, home values in North Texas have been relatively flat while they are falling in many other major U.S. cities.

In 2007, the median price of homes sold through the North Texas Realtors' multiple listing service was up 1 percent from 2006.

Texas markets – including the D-FW area – were also less affected by investors who ran up prices in some cities, Mr. Berson said.

And most Texas cities are outpacing the rest of the country in overall economics, he said.

"The state economy is doing pretty well, and job growth is above the national average," Mr. Berson said.

"It's quite likely Texas will be doing better than the national average for the foreseeable future," he said.

The D-FW area has gotten high marks in the PMI risk report before.

And other national surveys show that North Texas' housing market is outperforming those in the rest of the country.

Even so, pre-owned home sales were down about 8 percent last year, and sales of new homes fell about 17 percent in 2007.

Foreclosure rates also continue to rise.

Analysts are therefore keeping a close eye on D-FW home prices for signs of deterioration.
"I can't argue with the PMI risk assessment, but it doesn't mean that it still couldn't happen – just not as likely as elsewhere," said Dr. James Gaines, an economist with Texas A&M University's Real Estate Center. "

So far, most Texas markets are doing well.

"The metroplex probably will do well to have positive overall appreciation, but pockets within the metroplex will have a rough time for a while."

Indeed, Mr. Berson said, the Texas housing market isn't bulletproof.
"There are no sure things," he said.

"It's possible that some parts of Texas will see some declines in the near term."
But overall, the outlook for the local housing market is good, he said.

HOW RISKY IS THE HOUSING MARKET?
Markets with the most and least risk of a home price decline, based on price appreciation, economic growth and affordability according to PMI Group, one of the country's largest mortgage insurance firms. An index of 100 means there is a 100 percent chance of home prices falling in the next two years.

MOST RISKY
Riverside, Calif. 94 Las Vegas 89 Phoenix 83 Santa Ana, Calif. 81 Los Angeles 79

LEAST RISKY
Fort Worth Less than 1 Dallas Less than 1 Pittsburgh Less than 1 Houston Less than 1
San Antonio Less than 1

SOURCE: PMI Group

5 Tips For A Smoother Move!

Make sure that your moving quote is based upon a visual survey.

One of the biggest mistakes that people make, when booking a move, is assuming that a quote which is made over the phone is guaranteed. The only way to obtain a binding quote is to have your household goods visually surveyed by a moving company. Make sure that you get the quote in writing.

Read all documents before signing.

Once you have been provided a written quote, make sure you read before signing. The quote should document weight, distance, and services to be rendered. If you have verbally discussed any special services make sure that those needs are reflected in the estimate.

Make sure you have adequate valuation coverage.

Standard coverage for interstate moves, which all carriers are required to provide, is 60 cents per pound. This amount will be inadequate if an expensive item, such as a plasma television, is damaged in your move. Additional insurance can be purchased through the carrier or through your home insurance policy.

Use a reputable mover for your move.

The number of choices available for your move is enormous. Make sure that you are using a reputable mover who is licensed, bonded, and insured. A reputable mover will not ask for a deposit up front and will have moving trucks with their own company name on them.

Make sure the mover can contact you.

If you are planning to have your phone disconnected the day of your move, make sure that the moving company has your cell phone number or another way to reach you. This is also applicable for your new residence.