The Real Problem in the Market is....

The Fed did cut by.25%, which means that the Prime Rate is back down to 7.5% and that the Fed is keeping its promise not to sit on the sidelines while things go south in the credit markets. The move was originally greeted with a run on bonds and a run up in the stock market, but this morning bad banking results and poor oil company profits destroyed confidence in the stock market and there was a serious buy-up of bonds. That will be good for mortgage rates tomorrow.

Unfortunately, it won't be good for very many borrowers. It is increasingly difficult for even good-credit borrowers to qualify for loans, to the point that we have one fine client that wants an 85% LTV, full doc, owner-occupied loan, with 660+ credit...and he can't get an approval. This is the way of things right now, and it's very dangerous for the economy, in my opinion. We told four clients today that we couldn't get them financing at the terms they needed to make the deal work. For one of them, that will mean that she has to sell her house, if she can. Another can't buy one, and the other two cannot refinance to lower interest rates. Yeah, I know about FHA loans. I also know about up-front and monthly mortgage insurance, which all FHA loans carry.

It's not all bad news on that front, as there are still good rates available for those that want to purchase houses (and have a good jobs and excellent credit), or that need to refinance and have 20% equity in their homes. But other than that, it's really tough out there.

We're still here. We will be.