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Mortgage Rates Increase:
![3D052909.jpg](3D"MBSRateWatchWeekly_files/image004.jpg") 30 year fixed mortgage rates shot up to =
their
highest levels in six months last Wednesday.
Fannie Mae mortgage backed securities (they serve as the foundation f=
or
mortgage rates) dropped by -231 basis points in just three days.
Many borrowers that had been pre-approved for loans with interest rat=
es
in the upper 4’s found out that their new rates could be in the=
mid
to upper 5’s.
We did make a comeback on Thursday and Friday but this still left us =
-82
basis points worse than Monday’s rates.
The reasons for the deterioration in rates? It was really a
powerful 1-2 combination that set up our perfect storm. First,
foreign investors showed their concerns over our constant barrage of
Treasury sales. As we continue to auction off more and more of =
our
Treasury debt, we naturally must pay a higher rate to borrow that
money. That puts pressure on your mortgage rates.
Also, we received a few economic reports such as Consumer Confidence =
that
pointed to positive economic data. Any kind of economic data th=
at
is positive will lead to higher mortgage rates as long-term investors
fear the threat of eventual inflation that is a byproduct of a growing
economy.
Obviously, as we slowly climb out of our recession we will start to g=
et
more and more positive economic reports which will lead to this very =
same
type of volatility.
The silver lining? Mortgage rates are still fantastic and borro=
wers
that have been sitting on the sidelines were sent a huge wake-up
call. It is simply not worth the risk to wait for lower
rates. The opportunity cost of missing out on home prices that =
are
artificially and temporarily too low is not worth waiting for lower
rates.
The purchase market is about to heat up. We have great rates, l=
arge
inventories of homes, and reduced home prices…this all adds up =
to
the right time to buy.
What to w=
atch
out for this week:
![3D052209econ.jpg](3D"MBSRateWatchWeekly_files/image006.jpg")
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