I don't even know where to start. 
The week started with rates continuing to edge lower. Mortgage bonds were at two year highs and holding - mortgage bonds go up and rates go down. Monday was Martin Luther King's Birthday so the US markets were closed. Overseas markets were open and having a tough time. Tuesday morning - the fed reduced the prime rate by 3/4% ahead of their scheduled meeting on January 29th. Then the phones started to ring.
Typically when the feds lower their rate, mortgage rates go up for a short period of time. I can tell you that these are not normal times. Rates continued to drop. Wednesday and Thursday were tough days for the mortgage industry. Much of the gains we had in the last three weeks were lost in 48 hours. We had three unscheduled price worsening notices which is not a good thing. Friday saw slight improvements - almost wiping out Thursdays losses.
Then the news came of a one year increase in the conforming loan limits. Right now the limits are $417,000 for a conforming loan. Anything over $417,000 will cost you on average an additional 1% in rate. The estimated numbers were all over the place - $650,000, $725,000 and 125% of the median home price. Now it looks like they are leaning towards 125% of the median price but not sure if they will look at a county or region. Regional calculations could hurt the Outer Banks but if they decided to base it by county - it would give some great alternatives for those looking to reduce their interest rate or convert their adjustable rate to a low fixed rate.
Many expect the feds to reduce the rate again on January 29th. Some are still hoping for another 1/2% reduction. My gut feeling is that we won't have another reduction in January but they will lower the rate in March. These reductions primarily affect home equity lines of credit, car loans and some construction loans. If you have any questions or would like to see if the recent improvements can save you money, please feel free to contact me at your convenience.
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