The stock market starts to move up, the mortgage rates start to move up.

Not exactly in lockstep, but that was what mortgage brokers were telling me at the end of the year.

I was not to worry about rates going too high in 2011, as the Fed was taking steps to keep rates down.

That doesn’t exactly seem to be the case.

A broker wearing rose-colored glasses tell me that 2011 is going to be the third best year in the history of mortgage rates (2009 being best, 2010 2nd best).

That’s her way to telling me that rates are going to be higher than last year.

I like that spin.

Olga Savelov of Universal Mortgage told me, “if things worsen dramatically in the Eurozone, this will drive money into US Bonds”

which she feels would drive down rates, but she also told me not to bank on that, that

“the trend will be to gradually move higher, and end the year over 5%.”

Still, these are better rates than I expected to see by end of this year.
I ran into another mortgage broker as he was on his way to the airport, to a Wells Fargo all-expenses-paid trip for top earners.

It seems like 2010 was a good year to be a mortgage broker.

What he told me is probably more telling than the positive spin.

He told me that he is getting more calls for refinancing now than he has in all of 2010.

You may ask “Why didn’t these people refinance last year?”

The main reason is that 2009 was such a horrible year for commission-based salespeople, and bonuses were down that year as well- that people didn’t show enough income to be able to pass scrutiny by lenders.

As soon as they file their 2010 taxes, which is happening now, they can all pass muster.

This is really interesting.

With the fate of Fannie Mae and Freddie Mac not exactly a foregone conclusion- they may still survive- people are stepping up to get their homes refinanced while the rates are still relatively low- and before underwriting gets any more tough.

A great Wall Street Journal article this week talked about the private sector stepping into the fray to make up for lack of lending by Fannie Mae et al.

My feeling is that buyers in the market now should have no problem finding lenders for NYC property, which is still at 2005-2006 pricing in many areas- big downpayments, easy valuations.

It’s just everywhere else that might see problems, if the flow of this GSE lending dries up.

This will be interesting to watch.

Will we see rates drop if there’s a correction in the stock market?

Probably.

Will we see the Fed step in if rates go much higher?

I have to be highly doubtful of that.

Frank Cronin of Guaranteed Home Mortgage told me “I do not see 30 year below 417k going past 5.375%, and 30 year below 729k going past 5.625”
We’ve seen the high end of the market be very strong as of late.

If this is the case, I think we’ll see continued strengthening in the area which has been a little weak, properties hovering around $1 million.