Just before 5pm yesterday, the senate voted for and passed the bill containing funding for the USDA Mortgage program that we spoke of yesterday. Lenders are now able to more forward on applications that until now were stuck in limbo. For people who have been waiting for this funding, we recommend closing ASAP, as many lenders will have an overwhelming workload of “last minute close’s” towards the middle/end of June.

The only caveat at this point is that this funding is available pending Congressional approval and that the loan approval time could be longer than previously seen due to new regulations.

Funding for this rural development program is still limited though, so if you are planning on taking advantage of this program, we recommend that you put in your loan application soon. This program, which offers lower down-payments and favorable interest rates for rural properties, is a perfect compliment to already-low property prices in some rural areas.

Plus, when our infrastructure collapses, you will have a head start on subsistence farming!

- Mortgage Pro Blog; Geoffrey Boyd; PrimeLending Clackamas OR

Today’s $31 Billion 7-year Bond Auction showed increased demand over yesterday, but the result was average at best – demand increased only when yields went up.

As the US Government increases its borrowing to cover the massive amount of new spending, we will very likely see demand for bonds decrease and average yield increase in response. This demand, of course, depends on the perception of risk in stocks and the likelihood of economic turmoil domestically or in other unstable economies (currently Europe, but who’s next?).

Side note: Let us know where you think the crisis in Europe is going – vote in our poll (on the sidebar) or give us feedback in the comments section below.

Mortgage rates are showing stability now, after spiking this morning; but the low rates that we have seen recently are unsustainable by the market for long; our prediction is still an upward trend in rates unless drastic changes in market forces are present.

In other news, Congressman Ron Paul has announced support for a third Homebuyer Tax Credit bill, making the credit permanently available to new homebuyers. The low mortgage rates of this past week are quite the incentive for prospective homebuyers – do you think that permanently adding an incentive tax credit will buoy the market, or simply exacerbate the larger problems plaguing our economy?

- Mortgage Pro Blog; Geoffrey Boyd; PrimeLending Clackamas OR

For those who spent their morning under a rock…

Today’s 40 billion dollar five-year bond auction fell short of industry expectations. Despite an optimistic report on new home sales from April (as many buyers took last-minute advantage of the tax credit), bond prices and market confidence shows hesitance to bet on market recovery.

Thursday’s $31 billion seven-year bond sale will give a clearer look into the state of the market.

A little background for the uninitiated – bond prices are tied inversely to mortgage interest rates. The least complicated explanation is that if market interest in bonds is low, which drives up the % yield, the mortgage rates which fund that yield will rise as well. Tuesday’s gains on Treasury Bonds were consequences of an unstable global market, were reversed today as global market prices rose. Notably, new information out of Spain and Portugal points to a more stable future than initially predicted.

My prediction is that as the Fed begins to unload their mortgage bonds, the market will become even more flooded with Government Debt and the laws of supply and demand will take over, driving bond prices even lower and raising the extremely low mortgage rates that we have seen this week. If you are on the fence about locking in – waiting could come back to bite you; lock in now to preserve rates that may never come again.

-    Mortgage Pro Blog;    Geoffrey Boyd;    PrimeLending Clackamas OR