On Tuesday morning the Federal Reserve and Federal Home Loan Banks announced that they would purchase up to $600 billion in Mortgage-Backed Securities (MBS). The exciting part of this announcement, is that it sent mortgage interest rates down to near the lows for the year. With the bond market now closed for the week, three trading days later, mortgage rates at still at these low levels.
If you follow me on @dailyrate on Twitter, you have seen that mortgage rates have now in the 5.5% range on a 30 year fixed loan. Dropping almost half a percent from Monday to Tuesday after the announcement.
The question now though is how long will the rates stay down and will they go lower? With the economy in the shape it is in, inflation giving way to fears of deflation, and the spread between MBS and the Treasuries; rates have room to drop or at least stay at these levels. On the other side of coin though is history. And for the last three trading days we have hit the high closing price (price and yield (rate) have an inverted relationship, as the price of the bond goes up the rate goes down) for the year and have been stopped. If we can’t break through this level, then this may be as good as it is going to get. Also if Black Friday turns profitable for retailers and the Holiday shopping season goes better than expected, the retail stocks could improve and pull money out of bonds and into stocks. This would put upward pressure on mortgage rates.
My point is if you are in the market to buy a home or refinance, don’t wait. Get with your mortgage professional and starting getting advice and pre-approved. That way when you feel the time is right you are ready to go. Rates have already been very volatile and this opportunity might not last long. If you don’t have a loan officer, let me offer you some pointers to help you negotiate this process.
To learn more about me, go to www.leemclain.com. Thanks and have a great day.
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