Today brought continued volatility to the world of mortgages. Over the last couple of days mortgage rates showed a nice decrease on the heels of the Fed's announcement that they would be purchasing Mortgage Backed Securities (MBS) in an attempt to narrow the spread between MBS and Treasuries. This announcement fueled a big rally in mortgage bonds and helped to bring rates lower.
All things that go up must come down. The sharp run up in bond prices may have been a blip on the computer screen. Mortgage bonds on Wednesday saw wild price swings and finished the day in negative territory. So clients who heard rates were falling might meet with a little disappointment as the lowest rates of the day were to be had early today. With the afternoon's price erosion, mortgage rates saw a tick upward.
Did the recent Fed cut in interest rates benefit those of you who are in the market for a mortgage? While the Fed did cut rates, it does NOT have a direct effect on mortgage rates. For a complete explanation click here on why Fed rate cuts DON'T equal lower mortgage rates.
The rally we saw in the market was driven by the Fed's announcement that they will be purchasing MBS securities. It was NOT the result of the Fed rate cut. Like with other strong favorable moves, they tend to be short lived. We have already started to see the recent price improvement start to fade away.
For well qualified borrowers paying all closing cost, with an escrow account and no other unique loan characteristics rates were at a low point of 4.99% for a 30 year fixed rate and ended the day closer to 5.25%.
IMPORTANT!
Any lender who quotes you rates or cost without an application or review of your financial position is leaving you open to risk. Simply put, there are too many factors to quote generic rates and terms. The day's of one size fit's all mortgage rates are long gone. Want to understand more on the world of Mortgage Rates? click here.
We are diligently working through the backlog of phone calls and e-mails. Thank you for your patience. Please continue to check back often as I will continue to try and update this blog with market information.
