Ed's Blog

Don’t you love clichés? And hate them too? They say everything and nothing at the same time! They’re kind of an everyman’s or everywoman’s version of the Oracles of Delphi. So, I’m going to lay them on today!

Let’s start with, “There are two sides to every coin.” It just happens to be a great depiction of the current mortgage climate.

Consider the mortgage market to be the “coin.” On one side you find the subprime market which is frankly, still in shambles. On the flip side, however, you have the prime market, which is faring quite well. In fact, that’s an understatement. The prime market is holding up remarkably well.

Unfortunately, that message doesn’t appear to be getting across to first time buyers, and home owners with decent credit, verifiable income and money put aside for a down payment. That is, many people who fall into the “Prime” or “A-Paper” category, seem to have accepted the media’s portrayal of the mortgage market (“Freefall!” Mortgage Meltdown!” “Take Cover, The Sky is Falling!”) as financial gospel.

The reality is that there is still a great deal of money in the mortgage industry. Wall Street has not bailed out on buying loans from A Paper clients. Fixed rate mortgages for this large portion of the marketplace remain in the low 6% range for conforming loans. Even in the jumbo market –loans above 417K- interest rates are leveling out in the 7% range for 30 year fixed rate loans.

So, pardon yet another cliché, but I have to recommend that we all take the media’s portrayal of the mortgage climate with a “grain of salt.” After all, you can’t lose on heads AND tails can you?