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fed: Mortgage-Treasury Spread Hits New Lows - Are mortgages safer now? - 04/05/10 11:51 AM
Mortgage-Treasury Spread Hits New Lows - Are mortgages safer now?
In mid-March, a number of articles were published suggesting that the end of the Federal Reserve's Mortgage Backed Security purchase program might drive mortgage rates somewhat higher, fairly quickly. The Fed had telegraphed this upcoming action very loudly and very clearly since 2009.
The program has had substantial effects on mortgage rates over the past 16 months. It immediately lowered mortgage rates by 1/2% or more, and, over its course, brought 30-year fixed rates to their lowest point ever, at 4.71% in December of 2009. It also had a profound effect … (0 comments)
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fed: Mortgage-Backed Securities Losing their Stigma - What we can learn from the current Mortgage - Treasury Spread - 06/15/09 01:13 PM
Is there a light at the end of the tunnel? Investors may be suggesting so with the recent surge in the Dow Jones Industrial Average from its March low below 7000 to a recent peak over 8700. Still, some doubt should exist considering the recent economic data hasn't so much indicated the United States economy is getting better, rather that the economy is worsening at a slower pace. Still there is one area, very close to the epicenter of the economy's troubles, that suggests recent changes are achieving their desired results.
In the 18 months leading up to December, 2008, the … (18 comments)
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fed: Mortgage - Treasury Spread closes sharply in January - is Fed buying bringing stability? - 02/12/09 10:19 AM
In a month which saw the lowest 30-year fixed rates on record, it isn't surprising that the massive groundswell of refinancing we experienced happened. Its consequences could also be seen as quite predictable: lenders, fresh from laying off thousands of employees in 2008, saw their operations grind to a halt as they received an onslaught of mortgage applications. The reprecussions to market interest rates were rather more cryptic, though. By the end of January, the Mortgage-Treasury Spread had closed to its tightest range since September, 2008, closing the month at 2.28%.
The 10-week moving average stayed relatively level at 2.78%, bouyed … (4 comments)
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fed: Mortgage - Treasury Spread Remains Near Peak for December 2008; Fed Action Awaited - 01/02/09 02:53 PM
The Mortgage-Treasury Spread remained near its highest ever level in December, as investors retreaed into the safest available investments to close 2008. Treasury instruments of all maturities saw one of the biggest demand spikes in their history, a sign that risk tolerance was negligible this month. Throughout the month of December, the spread remained largely unchanged from its December 4th level, closing the year at 2.86%. This is down slightly from the December 4th spread at 2.96% The historic low treasury yields reached in December are instrumental to the high spread, as mortgage rates dropped through the month to historically low … (0 comments)
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fed: Rates drop sharply on $600 Billion Fed Purchase - expect to see 5.5% 0 points in some cases - 11/25/08 09:12 AM
I only have a minute to post right now, but I wanted to make sure you're aware that there has been a dramatic shift in mortgage pricing this morning.
This morning the Fed announced it was going to buy $600 Billion in mortgage assets. This has had a huge impact on rates, with most mortgage rates at least .375% better on RATE than they were yesterday. If you’ve been waiting for the right time to lock a floating loan, or you’ve been waiting on refinancing for a better rate, it’s here. Today is the day to make that move, but don’t … (0 comments)
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fed: What’s going on in the market - 10/14/08 09:19 PM
Last Wednesday, I gave a brief presentation on the state of the financial market. I thought it would be of value to share it here, too. I hope this helps to make the current situation a bit more understandable.
Capital Markets are based on the assumption that low-cost short-term (overnight) credit will be available to banks. Banks need this credit to meet Federal Reserve requirements for reserve funds. The majority of lenders to banks are other banks.
As mortgage markets have deteriorated, banks have become more concerned about the health of other banks to which they lend.
Their concern is that … (0 comments)
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fed: Wall Street Rocked by Credit Fallout; the Definition of a Flight-to-Quality - 09/15/08 12:19 PM
If there is rock & roll playing in lower Manhattan this morning, it is probably The Doors' "Peace Frog", as investors awoke to a market seeing financial giants Lehman Brothers, Merrill Lynch, and American International Group all discussed in badly negative news.
Lehman, a troubled investment firm with major investments in the mortgage market filed for Chapter 11 Bankruptcy this morning. Its stock has declined from over $65 at the beginning of 2008 to less than a quarter this morning. The company had sought government intervention or an outside buyer over the past 10 days, but when none was forthcoming, found … (1 comments)
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fed: Worries at Fannie, Freddie, push Mortgage - Treasury rate spread close to 52-week high - 07/11/08 09:06 AM
Fannie Mae and Freddie Mac have been struggling with the fallout of the mortgage and foreclosure crisis for some time now. This week alone, there have been several front-page articles in the Wall Street Journal. In pre-market trading this morning, stocks of the two companies are in free-fall, suggesting possible losses as high as 50% today.
Recent troubles haven't helped the mortgage bonds of these companies either, which have lost significant value. Remember that bond prices, or value, move inversely to yield, or interest rate, and you will see that in a vacuum, mortgage rates should be rising.
Look at recent … (4 comments)
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fed: It's the Innuendo, Not the Actions - 06/25/08 07:16 AM
The Federal Reserve Open Market Committee will adjourn its first meeting of the Summer today, and is expected to make an announcement at 2:15 PM regarding its decision to raise or lower interest rates. At this point, virtually no one in the investing world expects the Fed to make any changes to policy at this point; rather Wall St. will be listening very closely to the specific wording used by the FOMC in today's brief announcement.
You might be asking, though, if the Fed is leaving things as they are, why should this affect other interest rates, especially mortgage rates?
In … (5 comments)
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fed: Mortgage / Treasury Spread Widens, On Average - 04/21/08 02:48 PM
Mortgage rates moved up sharply as last week drew to a close, propelled by a string of positive news out of Wall Street. Several major banks reported colossal losses, yet, because these losses were less than the even more colossal losses that had been expected, the stock market reacted by increasing over 4% on the week, taking wind out of the sails of bonds. Remember that when bonds fall, yields, or rates, increase, and on the week we saw between .25% and .375% increase in rates on most mortgages.
We've seen a few months now of a higher-than-normal spread between 30-year … (0 comments)
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fed: Rates improve sharply - will it hold? - 03/03/08 11:27 AM
Last week was just what many loan officers and borrowers were looking for: a week of sharp improvements in rates. What we saw was a substantial "flight-to-quality" as investors shied away from stocks and moved their money into safer treasury bonds. This was triggered by several reports indicating higher than expected inflation, and reaffirming slow economic growth. Chairman Bernanke's comments to congress also supported the weakening of the economy, but reaffirmed the Fed's commitment to encourage growth.
The challenge is a pheonmenon called "Stagflation".
Stagflation is said to occur when economic growth is shrinking, or stagnating, and inflation is increasing. The challenge … (3 comments)
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fed: US Presidents' Housing Achievments (and a rate update) - 02/18/08 11:02 AM
Good morning!
This Presidents' Day is a wet and windy one here in Rhode Island. Today, in addition to a brief interest-rate market recap and preview, I thought I'd bring you a history of significant events in United States housing history, and the Presidents who effected those changes.
In 1862, Abraham Lincoln signed the Homestead Act, which allowed anyone who had never raised arms against the United States to claim title to up to 160 acres of undeveloped land in the west by following a simple, 3-step process. This was one of the first steps in opening homeownership to African-Americans.
Franklin … (0 comments)
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fed: Bernanke speaks to congress - 02/14/08 12:55 PM
Treasury Secretary Hank Paulson joined Federal Reserve Chief Ben Bernanke in congress today, and said that they don't expect the US economy to experience a recession in 2008, rather they see slowing growth, with a total increase of 1.8% over the 2007 Gross Domestic Product increase.
The market was not impressed.
Long-term rates had already started to move higher late yesterday, and they continued today, pushing many quoted 30-year fixed mortgage rates to 6.0% or higher. Meanwhile, the stock market moved lower, with all 3 major indices off by about 1%.
The Chief did indicate he was ready to cut rates … (0 comments)
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fed: Rollercoaster updates; Radio Tomorrow! - 02/01/08 04:47 PM
Good evening!
I hope your week was as interesting as mine was. After taking all of last week off for vacation, there's nothing like coming back to the flu to get off to a good start. The market certainly made it worth hanging in and watching.
Earlier this week, I told you there was a whole calendar of economic data to contend with this week. Here's how things turned out:
Monday: New Home Sales ACTUAL: 604,000 / ESTIMATED: 645,000 = BADTuesday: Consumer Confidence A: 87.9 / E: 87.0 = GOOD / Durable Goods A: +5.2% / E: 2.0% = GOODWednesday: Gross Domestic … (3 comments)
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fed: If you thought last week was a roller coaster. . . - 01/28/08 09:48 AM
The week of January 21, 2008 was one of the more exciting weeks I have seen on the market in quite some time, and that comes with being just a 4 business day week. Of course, most of us around here worked Monday, also; I didn't. I'd planned vacation for the entire week for more than a month.
By the end of the week, we'd seen a degree of volatility in the stock and interest rate markets that hadn't been seen in a long time. Here's a quick recap of some highlights:
Tuesday saw the Dow open down more than 3%, … (21 comments)
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Dan Hartman
Providence,
RI
More about me…
Province Mortgage Associates - (401) 263-8655
Address: 10 Davol Sq, Providence, RI, 02903
Office Phone: (401) 490-4400 x 114
Cell Phone: (401) 263-8655
Email Me
Dan Hartman's Blog about mortgages, real estate, and the economy in New England, and the United States, especially Rhode Island Rates, Connecticut Mortgages, Massachusetts Rate Locks, and New Hampshire Home Sales. Let Dan leverage his MBA in Finance and experience as a college professor for you!
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