When This Chart Gets to $1,250,000,000,000 – Mortgage Rates Are Going to Go Up….

So what does this chart represent?   The Fed’s purchase of mortgage backed securities.   They committed last spring to spending $1.25 Trillion worth of our money buying mortgage backed securities and originally planned on doing it by November.    They then decided to “ease” out of things and take until March to do it.

Rates at that point dropped by .375% overnight and have since dropped further.    I’ve read a variety of analysts predictions that rates will go up by anywhere from .25 to 1.25% when the Fed steps out of the market.   My personal opinion is that we aren’t going to see a dramatic reversal, but rather a slow increase once it becomes evidence that they aren’t going to extend it out further than they already have.

Tomorrow’s Federal Reserve Open Market Committee meeting (which is held behind closed doors) will potentially give some insight into the question of whether, how long, how far they might extend or shorten their market stimulus.   My prediction is that we won’t see them make any dramatic moves but reaffirm that they’ll be done in March.    I also don’t anticipate we’ll see the effects of the market dealing with a huge buyer leaving the marketplace until well after the New Year when we get closer to them really being finished.

Stay tuned and if I can help, let me know.

Tom Vanderwell

Mortgage Rates for Friday, October 30

Technorati Tags: Mortgage Rate Update

Mortgage Market Update

Well, it’s Thursday afternoon and time to take a look at what’s going on in the markets today.   Here’s an overview:

• Some earnings reports have come in better than expected.   Ford actually made money.
• Unemployment claims came in mixed – continued claims were down, but new claims were up.
• Existing Home Sales came in with a sign that we might be heading in the right direction.
• The government announced that they are going to be buying a bunch more Treasury bonds and mortgage backed securities in the next few weeks.  This is raising concern that the bond market is going to be inundated with additional supply, more than they can handle.
• Some of the regulatory and health care changes that the administration is proposing appear to be running into obstacles.   

Those issues are combining to put some upward pressure on mortgage rates.    My recommendation remains to lock all loans.   The upside risk caused by the relatively good economic news and the increased government borrowings is going to make it more likely that rates will go up than it will that they’ll go down.

I’ll continue to keep you informed, stay tuned.

Tom Vanderwell

P.S. Here’s a sample of some of the rates that I’m quoting today:

Purchase, $350,000 sales price, 20% down, 30 year fixed, 30 day lock, owner occupied, 5.125% with 0 pts or 4.875% with .75 pts.

Purchase, $270,000 sales price, 3.5% down, FHA, 30 year fixed, 30 day lock, owner occupied, 5.125% with 1 pt.

Refinance, $280,000 loan amount, 80% loan to value, 30 year fixed, 60 day rate lock, owner occupied, 5.5% with 0 pts.

All conventional assume a 740 credit score, FHA assumes 660.

APRs available upon request.

Mortgage Market Update

Well, it’s been a chaotic day with personal schedules, so the mortgage market update is a bit later today than what I’d like.   So, what’s happened since yesterday and the bond market rally that Fed Chairman Bernanke’s comments caused?   Frankly, not much.   Rates really haven’t moved hardly at all.   What’s up with that?  A couple of things:

• What Bernanke said is essentially that rates are going to stay low for quite a while.   We already knew that.
• The posturing that happens in Congressional hearings really kind of mutes the overall effect of the hearings.  We already knew that.
• There’s the over riding “issue” that is starting to take a bigger and bigger portion of the “stage” and that is, “When we do start to come out of this, how is the Fed going to back out of the positions that they’ve gotten in to?”   More directly, what’s going to happen to the $1 Trillion worth of Treasuries and Mortgage Backed Securities that the government has bought when they want to sell them?   I’m working on another post about that, and it’s ramifications for the housing and mortgage markets that I’ll hope to have up on Straight Talk – The Bigger Picture in the next few days.
• Questions about the banking world – especially the commercial real estate market are raising questions on whether this rally is “real.”

So, all of this has really led to very little change in mortgage rates.    My recommendation remains to lock all loans.   The downside potential for rates is significantly smaller than the upside risk due to inflation, exit strategies, economic issues and the like.

I’ll keep in touch, stay tuned.

 

Tom Vanderwell

Here’s a sampling of the rates that I’m quoting today:

Purchase, owner occupied, 30 year fixed, conventional, 10% down, 30 day rate lock, under $417,000, 5.125% with 0 pts or 4.875% with 1 pt.

Refi, owner occupied, 15 year fixed, 80% loan to value, 60 day rate lock, under $417,000, 4.875% with 0 pts.

Purchase, FHA, 3.5% downpayment, 30 year fixed, 30 day rate lock, 5.125% with 1 pt.

(All APRS available upon request).

Mortgage Market Update

Well, we’re off to the races.    What’s today looking like in terms of the mortgage market?   A couple of potentially market moving things are going on:

• Leading Economic Indicators – came in up again for the third month in a row.  Another sign that we’re not necessarily turning things around but at least avoiding the rapid decline from earlier.   The start of a bottom?   Many analysts feel that is true.   I’m hoping so but withholding judgement.
• CIT – the small business lender who was going to file bankruptcy on Friday announced they worked out a stop gap $3 Billion plan to keep them out of bankruptcy.   I was on a conference call with a nationally known economic analyst (who will remain nameless) and he was very blunt about his feelings on CIT.   He said the only thing this will do is give them time for an orderly bankruptcy rather than a crash.
• Bond yields and mortgage rates – on the same conference call this morning, the prediction was made that 10 year Treasury yields will be in the 4.25% range by the end of the year.   The main reason for that is, as we talked before, the law of supply and demand and the amount of Treasury borrowings for the rest of the year.   Now as we all know, there isn’t a direct link any more between Treasury rates and mortgage rates but anyone who says they aren’t influencing factors of each other is nuts.   So, realistically we’re looking at higher rates by the end of the year, if this fixed income specialist (meaning he trades in bonds) is right.

So where are we at in rates?  We’ve started the week exactly the same as what we ended up last week.

Recommendation – lock all loans.   While there are some good signs about the overall economy (if you can call “bottoming” a good sign), the impact of a bottoming in the economy along with the growing amount that the government is borrowing isn’t going to be friendly for mortgage rates.

I’ll continue to keep informed, let me know if I can be of help.

Tom Vanderwell

Mortgage Rate Update

Mortgage Market Update

Well, it’s Friday morning and we’ve made it through a week of Treasury auctions, G8 meetings and squabbles over how bad the economy is.   What are mortgage rates doing today?

So far, they’ve stayed pretty stable from yesterday.   A combination of falling oil prices, gloomy economic attitudes, blunt and disappointing earnings reports and a dismal attitude in the stock market helped the bond market make it through a very big week worth of Treasury auctions in pretty good shape.

My recommendation still remains to lock all loans.  Why?  A couple of reasons:

• A “gut” feeling that the bond market has over reacted to the good news and rates fell more than is justified.
• The increased call for a second stimulus package will put upward pressure on mortgage rates.
• The growing “talk” about a change in reserve currency (see this week’s Mortgage Market Week in Review for more on that) if it does anything will put upward pressure on rates.

I’m currently estimating a 70% chance that rates will go up and a 30% chance rates will go down. 

Tom Vanderwell

Here’s a brief overview of the rates I’m quoting:
30 year fixed – 5.0% with no points
15 year fixed – 4.5% with no points
30 year fixed FHA – 5.0% with 1 pt or 5.25% with 0 pts.
All rates are for purchases, under $417,000 (or under FHA limits for your area – call or e-mail for details), credit scores of over 740 (over 660 for FHA) and a 30 day rate lock.
APRs are available upon request.

Mortgage Rate Update

Market Update for March 23, 2009

Mortgage Rate Update

Mortgage Market Update for 12-2-2008

Mortgage Rates have been updated.

Reactions and Recommendations:

The stock market is staging a bit of a rally today.   Why?  Because Ford said they expect to make a profit in 2011.  Once again, like last week, the market is reacting to emotion and, in this case, saying, “Oh good, the auto industry is in okay shape!”

Has anything of substance changed between yesterday and today?   Nothing that would have an impact on the overall markets.   So don’t expect this rally to continue for too long either.   Until we see a rally that has a solid basis on fundamental facts, it’s going to ride the roller coaster of hope and fear and greed and despair.

Recommendation – due to the volatility, I’m recommending that you lock all loans.   There is the possibilty that rates could go down, but I believe the upside risk is greater than the downside potential.

Have a good day and check back often.   I’ll be writing more as news breaks and issues warrant discussion!

Tom Vanderwell

Mortgage Rate Update

Mortgage Rates have been updated.

Like I said earlier this morning when I took a “Look at Things” rates have inched up again today.

Recommendations and reactions:

The stock market is rebounding this morning on news that Citibank is discussing the idea of selling itself due to the problems it’s facing.   This has reversed some of the flow of money and has put pressure on mortgage rates.   In addition to that, a large part of Citi’s problems are due to the mortgage market and that has increased investor hesitancy in the mortgage backed securities market.

Recommendations:  Volatility continues – Lock all loans.

Stay tuned,

Tom Vanderwell

Mortgage Rate Update for November 18, 2008

Mortgage Rates have been updated for today.

Recommendations:

There is a lot of “simmering volatility” that is just under the surface.   Between the testimony going on in Congress, the future of the Big Three, and the rest of the financial turmoil, a lot of negative implications for the markets.

As I’m sure you know, the bond markets don’t like uncertainty.   And when uncertainty goes up, rates tend to go up as well.   Because of that, I’m recommending:

1 Day – Lock

15 Day – Lock

30 Day – Lock

I’ll keep you updated.   Stay tuned!

Tom Vanderwell