Okay, the holiday’s are over, and it is time to get back to work.
Regular blogging will resume in short order, but it’s worth pointing out that, as announced back in November the Fed has started to purchase mortgage backed securities in an attempt force mortgage rates lower.
And it is working.
As I write this, mortgage rates are dropping steadily as the Fed pours money into the mortgage backed securities market. Prices of Fannie Mae mortgage backed securities have improved over 100bps (which, loosely, translates into .25-.375% improvement in mortgage rates) since the market opened yesterday. That is a huge, though not unprecedented, two day move.
So, by the end of the day today, 30 year fixed rates should settle out somewhere between 4.625 and 5.125%, depending on the usual variables of loan size, property type, property value relative to the loan amount (“LTV” or Loan-to-value in mortgagespeak), credit score, points paid, and how long you need to lock the rate.
Interesting bit of backstory here. When the program was first announced, market participants (financial institutions that buy and sell mortgage related bonds) raced to “front-run” the Fed’s buying, causing rates to plummet. But since hitting a low in mid December, the buying slowed to a trickle and mortgage rates were back into the low 5′s by last Friday.
Then, the actual buying started yesterday, and rates are on the way back down.
Anyway, mortgage rates are basically back at the lowest of the lows, which is great. How long will it last? Can mortgage rates move lower still? All great questions, but you’ll have to stick around here to find out.