“Stagflation” is the word of the week… a term you may hear increasingly in the news in coming days. Stagflation refers to an economic climate that shows signs of both inflation and recession at the same time. The last time we saw stagflation was decades ago in the 70’s and 80’s… times when the economy was not growing (recession) yet interest rates and other prices rose (inflation). We are seeing signs of stagflation again and this has made markets nervous and tumultuous. This week will bring the release of some significant economic data that we hope will lower mortgage rates later in the week though. 

 

Mortgage backed securities insurers are having liquidity issues that have affected mortgage rates with upward pressure and there’s talk of a bailout, but nothing is certain yet. Until these insurers are given the financial support they need to ensure they stay afloat, investors are likely to remain nervous about buying MBS, and this hurts rates. The biggest issue for mortgage rates is inflation, so act quickly to lock loan rates with your mortgage pro when you hear that signs of inflation are increasing.

 

March 7th is the day government loan agencies have promised to release the geographical areas that will qualify for the new, higher conforming loan amounts. While we eagerly await these new rates to take effect, there is still no word regarding when these loans will actually be available to borrowers. My advice is not to wait on buying because the rates may not be that much better than they are today even when they do take effect. Why? The market itself! We have seen rates worsen steadily in the past weeks, and unless this trend reverses the revisions to the conforming loan limits may not bring a significant savings to borrowers. Remember… “a bird in hand is better than three in the bush”.

 

Home prices in Marin in many towns continue to rise… in spite of economic indicators elsewhere. If you want to check appreciation rates in the Bay Area you’ll want to visit www.dqnews.com for the latest data. Be sure to check the median price per square foot numbers in their charts when tracking what your home may be worth… or better yet, talk to an excellent Realtor® and have them give you a market valuation for your home.

 
Prepared by:
AVATARA RESIDENTIAL & COMMERCIAL REAL ESTATE FINANCE
Ana Trueman
Senior Finance Consultant
415.706.6711
www.avataraloans.com
ana@avataraloans.com