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Friday, February 1, 2008

Jeffrey Bastress-Inman TV Video Interview-Startpoint

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Truth About Mortgage Rates & The Fed Cut

Is the media correct in their assessment on the Fed rate moves and how that relates to mortgage rates and the lowest mortgage rates ever? Are we as real estate professionals thinking this to be the case also?

Just so you know, fixed mortgage rates directly correlate to the 10 year treasury bond, which is an investors haven of choice when other markets such as the stock market are tanking. With a flush of investors money into mortgage backed bonds, rates drop as supply and demand dictates.

However, when the Fed lowers the short term discount rate, this is designed for consumer spending on short term credit and therefore investors may see the stock market as the better investment as profits pour into retailers etc. They bail out of bonds, and interest rates are on the rise to enhance back the now elusive bond investor.

This all happens with lightening speed, and in many cases it happens prior to any Fed move as investors hedge on the expected or react to the unexpected.

Here is what occurred over the last wild 10-day period: (NOTE: The 10 yr. bond is what affects the 30 year fixed rate mortgage rate)
· January 22nd (TUESDAY): 10 yr bond starts day at 3.60%. Fed drops short term lending rates by ¾% (75 basis points) which such a decrease had been unprecedented for 24 years! By the end of the day, the 10 yr. bond had dropped 18 bps to 3.42%.
Rates were set for the following day based on this information, and Wednesday morning opens with the best 30 year mortgage rates in many many years. It was short lived however. Like 1 hour!
· January 23rd (WEDNESDAY) The 10 yr bond goes up 16 bps during the day to end at 3.58% which is basically where it began the day before. Almost ALL wholesalers and the investors changed rates 3-4 times that day before finally just “calling it quits” and STOP taking rate locks until the dust settled on a very volatile market. Rate lock websites were jammed and rates at one minute were not good the next, all day.
Only a very lucky few got their rate locked, the rest either fell in the trap that rates are dropping so they wait, or they simple could not lock due to rate fluctuation and black outs.
· January 29th (TUESDAY) Fed drops short term lending rate AGAIN. This time by ½% (50 basis points)
· January 31st (THURSDAY) As of 11:30AM est. the 10 year bond is at 3.62%
Summary: Fed has dropped short-term rates an aggregate of 125 basis points in the last 9 days. This 1.25% drop is HIGHLY publicized and “every Tom, Dick, and Mary” consumer has seen it on the news and ASSUMES this directly affects mortgage rates going DOWN 1.25%. In fact the media hype it as exactly this.
In fact the 10 year bond started at 3.60% prior to Fed cuts, and is at 3.62% Thursday 31st. It is safe to say that there has been NO discernable over all decrease in mortgage rates in the last 10 days, except for a VERY short period of time on Wednesday January 23rd for one hour.
The good news in all this for the housing market is that the media, consumers and even real estate professionals believe that the Fed move means mortgage rates must be at an all time low. And this media hype is priceless to the perception needed right now in the housing market.
Perception is reality. So I am not here to dispel the hype, just to inform. After all, I am along for the ride as every one else, and my success rides on a robust housing market. So I for one say...."Thank You Ben Bernanke for lowering the mortgage rates by 1.25%!"
Maybe that's all any of us really need to know anyway.
Thank You
Jeffrey Bastress

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Tuesday, January 22, 2008

Back to Basics in 2008

Back to basics....
2008 has come full circle to taking the time to build personal relationships with our leads, customers, past clients and new contacts we make. We have had the luxury of the information highway in all our clients hands and all we had to do was wait for them to call us for help. We still have the information highway, but reaching out and building relationships once again is the key to our success in 2008.

I strongly urge you to regularly contact all past clients and simply tell them what your doing and you are there for them. Surprisingly as it seems, they will not refer friends and family if you do not ask them to do so. In fact in most cases they will over look us also if we are not asking for their new business and referrals. Just letting them know your still alive and well is good, and letting them know of your new services is better, and letting them know how they or their friends would benefit greatly from one of your services right now or the near future is the very best.

Past clients are by far the very best source of new business. If you are not contacting them on a regular basis, you are missing the very best opportunity. Do not settle for an email to them once a month, which is good and better than nothing. Email, mail a card or note, call and even drop over every once in a while. And when you do, make sure to spend at least 50% of any conversation listening to them and their needs. This will allow you to know how you can help them the very most, and they will know you care if they know you are listening. You have 2 ears and only one 1/3 of the time and listen the rest.

Leads in our data bases need to be reached out to in the same way. The days are gone where we can expect them to receive our daily emails, drive by all homes and then call us when they find the "one".

Nope. They need personal information about neighborhoods, mortgage programs, schools, home values, and through building these relationships they will be encouraged and have the confidence to buy. It used to be that a buyer had 20 minutes to decide on buying a home or not. They were not concerned if it was a good investment or schools or anything. Only if they were the highest bidder or not.

2008 we need to be a whole lot more. Buyers are afraid, uncertain, misinformed and have no direction or confidence in buying a home. They don't even know what mortgage options are available in many cases, and may not even ask. So reach out and listen and respond to the buyers needs that are in your pipeline of leads. Do not just wait and do nothing, as I can tell you how that will go for you.

FSBO's are Sellers and Buyers and need a mortgage. 70% of all FSBO's list with an agent that ask for their business. If nothing else, they may need other assistance if they find a buyer, like escrowing, contracts, mortgage needs. I would walk up and meet in person as many FSBO's as you can. It will open doors and if will open our minds to opportunities otherwise missed. Make 2008 the year to personally meet and talk to 6 FSBO's a week. After all, they are easy to find, they are selling a home, and they are eager to hear what you have to offer, and if of benefit to business. What could be easier? I know, I know....doing nothing is much easier:)

Your Sphere of Influence is every one you know or have known. It also can grow by introducing yourself to every one you meet during a day. The cashier, the hair stylist, the UPS man, the Teller, every one. Why not carry a card and hand it to...every one. Better yet, why not make a tri fold card as a mini brochure of your services, and hand it to every one new you meet. If I told you your immediate sphere of influence had 200 people in it, you may not think so. But sit and list every one you know and their spouses and workmates, old schoolmates, friends and family members, and their friends and family members you know. Social groups, church groups, business acquaintances, clubs, kids school, PTA, etc. Do they all know what you do and how they could benefit from knowing? They should! Your sphere of influence needs to know. How many times has someone in your sphere of influence bought a home or refinanced, and said to you.."I didn't know you were in the business"! How simple is that.

I was at the grocery check out when I got a real estate call. The cashier then asked me if I was in real estate and asked for my card, as she was looking to buy. She asked me! What a wake up cal that was. Back to basics and handing my card to every one I meet will put new business on my table for 2008. How about you? If they know, they are more apt to ask you. If you ask them for their business, you will get it every time. Your personal sphere of influence is huge. Put it to work for you.

That's it for now. Let me know if any of this is useful, or better yet let me know if you try any of my suggestions and they work for you. I will pass it on to the rest.

Be safe.....
Jeffrey Bastress