Market Update (11/30/2009)

Even though some “experts” have been saying for months now that rates are going to go up, they have actually gone down. Mortgage interest rates truly are at all-time lows. How long will this last? Even though I have been wrong over the last couple of months about the length of this rally in the bond market, I am not going to change by tune. These rates cannot last much longer. Can they?

We will once again be watching the Treasury auction this week to see how the market reacts. We also have the jobs report due out on Friday. This report can always stir a reaction from the markets.

Market Update (11/24/2009)

I know that these updates are starting to get boring. “Now is an unbelievable time to buy a home.” YAWN! “Rates continue to stay at 5% or lower.” YAWN AGAIN!

Well, at this point, boring is good. Nothing has been able to move mortgage backed securities higher lately. The stock market had a very strong day yesterday. Consumer confidence was higher than expected this morning. The federal government is borrowing money at an unprecedented pace. All of these factors often cause higher mortgage interest rates but have had no affect lately. How long will this continue? If I was in the market for a new house or was looking to refinance, I would not count on it continuing for much longer.

Market Update (11/23/2009)

Mortgage interest rates continue to look very attractive. I keep indicating that this trend will not continue, and I keep being wrong. This is good news because the current level is really good for potential homebuyers and for homeowners who need to refinance.

Today is another one of those days that is bucking the rule of stocks and bonds competing for the same money. The stock market is way up today and this has had no impact on the bond market. One of the reasons that this is possible is because the Fed is still purchasing Mortgage Backed Securities in order to keep interest rates low. Remember that this program is scheduled to end on March 31, 2010.

It truly is a remarkable time for interest rates. I am running out of words to describe it and am also running out of ways to explain that it cannot and will not last. Next year should be a different story. The expectation level is that 6% and higher is going to be the norm.

I know that now is not a time of the year when people are typically buying houses. That being said, this year should be different. A 30-Year loan of $150,000 at 6% will cost a buyer almost $35,000 in interest charges over the same loan at today’s rate of 5%. I know that 6% is not a bad rate, but it is not as good as 5%.

Have a great day!

Market Update (11/3/2009)

Not much movement today on mortgage interest rates as traders brace themselves for tomorrow’s Fed meeting. At that meeting, the Fed will leave their rates alone. The news will be if they hint at future interest rate hikes. The statement is due tomorrow at 1:15. We will update you if anything earth-shattering is included in the statement.

I have updated you in the past about what the Fed’s buying of mortgage backed securities has done for mortgage interest rates. This program which began back in January is set to end after the first quarter of next year. During these remaining couple of months, the Fed has about $273 billion to spend for this program. This is an average of about $12 billion per week. Although this sounds like a lot of money, the Fed was spending about $20 billion this summer on this program.

MY POINT: There is going to less Federal money purchasing mortgage backed securities over the next 22 weeks. The result should be less value in mortgage backed securities and higher mortgage interest rates.

Sorry for getting so technical this morning. Please let me know if you need some clarification.