Rates are up slightly but I expect rates to drop back into the mid to low 5’s in the not too distant future. I will elaborate on why later in this newsletter but I would like to initially discuss the President’s Emergency Economic Stimulus Package. President Bush signed the Stimulus package and as part of the package the Conforming Loan Limits will be increased to 125% of the median price for Boulder County. Based on the numbers provided thus far the number for Boulder will be $459,375. This number appears low but if you will recall on the last increase to $417,000 the number was adjusted upward after the initial release. HUD has 30 days to come up with the “official” amount for Boulder. I would assume that that means that the new limits will go into affect in 30 days. We have not heard any official word as to when we can start using the new limits. The impact on the increase will not be as large as we had hoped because we had hoped for a number in the vicinity of $623,000 - $723,000. What the number does mean is that a person buying a home for $575,000 and putting down 20% can get a conforming rate. I will keep you posted on any and all developments as they occur. A major reason for rates creeping up is that Warren Buffet has stepped in and offered a second level of insurance for municipal bonds. Buffet’s move has created a false sense of security for the troubled credit markets as the municipal bonds are the “low risk” bonds and not the mortgage related bonds. As one expert stated Buffet’s actions are like an ambulance coming to the scene of an accident and transporting the uninjured victims and leaving the injured at the scene to fend for themselves. The crisis in the credit markets is far from over and as Wall Street realizes this fact it will impact the mortgage markets further.
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