If you are desperate for something to do you could read the entire Monthly Treasury Statement or you could just flip to page 27 for the juicy bits.  On page 27 you will note that the Treasury spent $11.5 Billion on Agency eligible mortgage backed securities in April.  Sounds impressive but in fact this is the least the Treasury has spent in any one month since November of 2008.

Why does this matter and what does it mean for mortgage interest rates and buyers of homes in Miami and surrounding areas of South Florida?  Well, in short it means a whole lot.  What the Treasury and Fed have done over the past 8 months is nothing short of miraculous.  By dolling out tax payer dollars in a measured and steady pace they have managed to artificially keep 30 year fixed rates between 4.5% and 5.00%.  Compare this with the historic low prior to the liquidity crisis of 5.25% and it is easy to see what effect this effort has had on both the mortgage and housing markets.  Of course some would argue that that tax payer dollars should not be used in this manner but I assure you that the alternative is far more painful.

The historically low interest rates we are currently offering for both conforming and Jumbo mortgages in the Miami mortgage market have had and will continue to have a positive effect on the local housing market and economy as a whole.

Recently during several speaking engagements I mentioned the niche that some small to mid-sized banks are filling in the residential mortgage market for Miami and South Florida.  The “distressed market” policies of some of the major lenders and larger banks including that of my employer are creating an environment where down payment requirements and/or underwriting guidelines are preventing some buyers from moving forward with their home purchase.  This is particularly true in the area of jumbo mortgages used for the purchase of a home with a sales price between $525,000 and $1,500,000.

In this price range most lenders are requiring a 30% down payment however there are a few regional banks that will provide jumbo mortgages at these price points with just 20% down.  Additionally since these banks are smaller they are generally more nimble and can more readily adapt to local market conditions.  This ability to make quick policy changes allows these organizations to offer some specialized loan products that can bring buyers and sellers together to complete a transaction.

Some of my peers in the Miami mortgage market and my Realtor referral partners have inquired why I would bring this issue to light given that I will not directly benefit.    In think the answer to that question is obvious.  I  along with everyone else in South Florida do benefit each time a home is sold as it brings down inventories, helps stabilize the housing market and slows the decline of property values.

Ultimately the larger lenders will decrease their down payment requirements and relax underwriting guidelines as our local housing market stabilizes.  Until then I will continue to ensure that my clients and referral partners have all the information they need to make informed decisions about obtaining a mortgage in the Miami market.

If  you know of anyone who is buying or refinancing a home please have them contact me and I will ensure that they receive the benefit of all available loan products regardless of who the lender is.