Good morning all: Yesterday was a wild day. Mortgage rates just kept on getting worse. Our secondary market manager sits in the office next to me and she was glum, to say the least. I told her not to worry.
Here's what happened. The government (yes, they're the only ones buying mortgage backed securities these days) decided to take a breather yesterday. We even speculated if it was because they wanted to give everyone a breather. We've been pretty swamped lately. The so called "breather" had the bond market tanking and mortgage rates worsened by between 1/2-1% in most cases.
I believe this is short term. The government's appetite for guaranteeing mortgages is still there as they try and right our economic ship. Plus, the great unknown is the private market. Remember the private investors have effectively been on the sidelines since August 2007. It stands to reason they'll jump back in at some point.
Eventually mortgage rates will climb back up to levels we saw earlier this decade (think 7% or so). But, for now, I think our irrational fears are unfounded. I look for lower rates again, perhaps as soon as the middle of this upcoming week. Have a great day!
Paul McFadden
I hope your right. I do believe the government is committed to lower rates, at least for the short term.
We need a few weeks of interest rate increases to wake up the home buyers that are sitting on the sidelines when they should be taking advantage of the buyer market.
Follow me on Twitter: http://twitter.com/roykelley
I think that short term that's true! But I also think it's so artificial that it's only a matter of time before this house of cards falls down. The Chinese are the only ones buying our debt and the riskier it gets, the more that's going to cost us in interest to them. At some point, this has to be passed on. The question is when.
I heard that it was a big hike yesterday. I wonder if that will slow down buyers now who want to hold off to see if it goes back down?
It was a reality check regarding the effect of the government's buying MBS's. Foreign buying was a bit stronger which was nice.
IT's still much lower than before all the economic slow down.
Patricia Aulson/Portsmouth NH Real Estate
Great post and I agree. Thanks so much for the info and the positive spin on the news.
The same thing happened uner Carter and the rates went to 18%. Printing of gobs of money does not bode well for the long term.
Terry: You're very welcome! Have a great day in Tyler!
Patricia: Very true. Most people would be very happy with a 30 year fixed interest rate in the neighborhood of 5.25%!
Steve: Good point. We'll see what happens in the next few days.
Tracy: Perhaps although I think the buyers are less influenced by rate movement as compared to the refinancers. When a person is motivated to buy, they're probably going to move forward. Refinancers are the ones who tend to watch rates more.
Karen: I think long term you may be right. Again, the private market is the wild card in all this. It stands to reason they'll get back in the game at some point. Witness the buying of the bank in Florida that failed. That was by a private group of investors. Take care.
Roy: That's a good point I hadn't considered. Perhaps it will get the fence-sitters off the dime!
Mark: I think you're right. It's funny when you start down the path. It's difficult to just pull the plug! Thanks for your thoughts!
Norma: Obviously, we're all hopeful that scenario doesn't play out. The system is still on life support in many cases. The last thing we need is for something like that to happen!
Paul, thanks for your insight. I will be waiting for your update in one week.
Kathy: now you're putting me on the spot1 I love it! I'll keep you posted. They got even a bit worse today. We'll see what happens by Monday or so. Take care.
Paul, the rates have to vary every once in a while, or else people will take them for granted!
;)
Regina: Good point and thanks for commenting! Enjoy your day today!
I hope you are right, I've been thinking their is a possibility that they could climb to 7% or even higher depending on what happens in the next six months from the private backed securities. They need to jump back in soon or it could possibly even go back to the 80s and we could have percentages in the teens.
Todd: For now, the trend seems to be up. We've seen this before. I thought they might go back down sooner as opposed to later. We shall see!