Bryan Flynn's Central Massachusetts Mortgage Blog

head_left_image

Rates, rates, rates what is going on with rates?

Let's just throw out the adjustable rates for now, clients are scared, and no one wants them fixed rates are usually a better or very close the same rate anyway, except for maybe the 3/1 ARM because of the inverted or flat yield curve(what ever those are) so I won't speak of them.

How are mortgage rates determined?  From Mortgage Backed Securities or Mortgage Bonds NOT the 10 year treasury note like many believe.

 Rates are way off their lows of month ago right around 6.25% -6.375% for a 60 day lock today 2.26.08 as of 1:10pm EST on 30 year conforming (that is below $417,000 in most areas).  They did touch as low as 5% before on January 23rd for a very short time period. 

So why have they turned so rapidly?  Inflationary fears, with rising inflation, the value of a dollar in the future is considered less valuable causing demand for a higher yield on mortgage bonds, which drives trading prices lower on these bond thus causing rates to rise.

Bonds keep testing the 200 day moving average and have yet to close below that level.  If they do watch out...rates to rise another .25% or so. 

 So keep an eye out for inflation concerns as well as an increase in unemployment, those equal bad news for mortgage bonds and cause rates to increase.

 Please feel free to ask more information about rates, whether a Loan Officer or not, I can keep you up to date and help you provide more value to your clients.

Comment balloon 16 commentsBryan Flynn • February 26 2008 12:16PM
Rates, rates, rates what is going on with rates?
share
Let's just throw out the adjustable rates for now, clients are scared, and no one wants them fixed rates are usually a better or very close the same rate anyway, except for maybe the 3/1 ARM because of the inverted or flat yield curve(what ever… more
FHA, the new sub prime, or is it?
share
I have seen posts on here and I have talked with quite a few account reps and brokers proclaiming FHA is the new sub prime. FHA may be saving people who have not totally lost control of their finances after a rate adjustment, but loan officers out… more