There has not been a financial corner to hide in since the real estate bubble burst last year.  Mortgage rates came briefly down in September with the federal government takeover of Fannie Mae and Freddie Mac, but no sooner had the industry caught its breath, along came the tumbling of Lehman Brothers, Merrill Lynch, AIG, Washington Mutual and Wachovia to drive rates right back up and shove global sentiment through the floor.

At this point it is no secret that the easy credit practices of the past decade coupled with the bad choice by Wall Street to bundle these risky mortgages into tradable securities have left things pretty ugly in the housing market.  But, every coin is supposed to have two sides, so where is the good in this?

Sellers Hold Steady

The steady increase of housing supply over the past six years has flooded the market driving home values down.  New home construction went into overdrive in 2002 and continued to accelerate even into the second quarter of this year, so as foreclosures started hitting the market heavy in late 2007 it quickly became a buyers’ market.

In recent months, though, the National Association of Home Builders has begun to report a decrease in new home construction and inventory.  Couple this with the government bailout of U.S. banks to help bring foreclosures under control, and, simply put, housing supply leveled off and is beginning to recede.  The values of existing homes are going to follow suit and head back up.  The market will turn back into your favor – hold steady.

Buyers Act Now

The recent bank failures turned even the best borrowers into high risk investments driving mortgage rates up and brought a dramatic change in lending criteria.  The new guidelines in place are stricter, as they are aimed at setting the industry back on track, but the money is still there; banks are still in business.  In fact, the remainder of this newsletter is focused on re-introducing you to our lending programs – you’re still in the game.

It’s important to note, too, that the old adage of Buy Low-Sell High is now in textbook form.  The market may be ugly to sellers currently, but as I’ve noted already it’s always darkest before the dawn – the market is showing the initial signs of turnaround, so get out there now.  Mortgage rates will slowly stabilize as the market does, but for now the volatile rate swings can really pay off.  This is a great market for buyers and lenders are here to help guide you through this extraordinary time.

In Closing

The unprecedented economic events we’ve faced this past year have brought the mortgage industry to trial and those of us answering the call are becoming stronger for it.  We’ve built 1st Advantage Mortgage on a tradition of stability and our investment into the knowledge and expertise of our professionals has paid an intangible dividend into our future success.  We look forward to continually deliver the service you deserve and guiding you through to the bright days ahead.