Let me open my reminding everyone to hug their kids today.
Rates
With the fiscal cliff getting closer and closer each day, the markets have been becoming more and more nervous.
As they are, more and more people are pulling their money out of Stocks and Bonds and hording cash. Which is causing the bond markets to increase, thus causing interest rates to go up.
You can see by the above 1 month chart of Mortgage Back Bonds, rates hit their lows about the 1st week of December, and since then rates have risen (RED = Rates going up, GREEN = Rates going down.)
We have also seen lots of economic news coming out that is driving rates higher:
Unemployment has dropped to 7.7%
This is a pretty significant number, because the Federal Reserve did come out on Wednesday and set a point in time, finally a specific point in time at which they will start to pull back from their Qualitative Easing, i.e. lower rates.
And that number is 6.50% for unemployment. At that point, which could take about 1 year time, from what the talking heads have indicated, rates will start to go up.
Now that is a prediction, but what we do know is this, rates can't stay this low forever.
Are we seeing the beginning of rates going up this week, maybe, I think rates are really being sensitive to the Fiscal Cliff right now.
But all eyes will now be really focused on the unemployment rate and what will happen as it ticks closer and closer to 6.50%.
FHA changes:
FHA will announce shortly that their monthly MI will increase from 1.25% to 1.35%. But the bigger news is that the MI will NOT be able to be removed, unless you refinance out of FHA.
This is a HUGE game changer!
Mortgage Tax Increase:
The government is proposing to pass HR 1629, called hte STEM Jobs Act of 2012. Basically it will allow immigrants to be granted legal status if they have higher education, i.e. Masters and Doctorates.
Why do I bring this bill up, well it is sponsored by Rep. Labadour from Idaho.
And why do we care, because the bill is being paid for by a GFee.
What is a Gfee, it is a fee that is added onto a Interest Rate, thus raising interest rates on everyone who is getting a mortgage.
So let's call it what it is, Taxing Homeowners, plan and simple.