Financial Update by Maurice Soussé

Happy Friday,

Do you want to save $120 million over five years? Stop printing treasury bonds…The Treasury Department switched to an all-electronic initiative last year and starting January 1st you will no longer be able to purchase paper treasury bonds. All bonds moving forward will be bought online which saves money on tracking, printing, mailing and storage.

How about rates? Well, if you like low interest returns on your investments, 10 year treasuries are the way. The 10 year T is at 1.85% as I type this email. But, like many other industries, banks take huge profits during these down turns. You will see that the banks are buying money at a very cheap rate…but, they don’t in turn reduce rates to consumers on mortgages in an equal fashion. When treasuries drop by a .25% or so, you certainly don’t see mortgage rates drop that much. For each .25% lower in T bill rates, the banks on average only lower their interest rates by an .125%. Think of the profits to the banks on the billions of dollars lent each day. Remember, the banks always win.

Have you had to work with a large bank lately on one of your transactions? How long did it take to close? We are still at 30 days or less on purchase transactions and can close even faster in many scenarios. Word on the street says the big box banks are still at 45 days plus. Let us get your deals close quickly and without any headaches to you.

Take a look at the 7 year jumbo rate. 3.25% up to %1.5 million and $3.375% from $1.5 to $3 million. This is incredible stuff!!

For the quote this week I really like David Weatherford’s comment: “When faced with a challenge, look for a way, not a way out”

Have a blessed weekend.

Rates and Arms 12-16-12, The Sousse Group, Luxury Irvine Condos