Well, it was a hellish week for Mortgage Rates, with most of the "Pain" being Wednesday.  I tried to post a blog Wednesday on the subject but the AR bugs wouldn't allow me to post or comment for a few days. But things seem to be humming along now.

So, What happened?  Well Wednesday was one of the Worst blood Baths I have seen in the MBS markets in quite a few years.  I am a little "old School" when it comes to mortgages, so I view it all in 32nds.  From early on on Wednesday, we saw a sell off that built on itself like a snow ball all day.  Every few minutes I was receiving "OH-Sh--" updates on my Blackberry.  By the end of the day we saw Fannies down 51/32 and Ginnies down 50/32. That's a HUGE move when you consider it usually only takes 5-7/32's to move rates on a rate sheet.

The first layer of the cake was the 10 year note bumping above a psychological level of 3.6%. This scared the market. Next we had some analysts stating that we were going to move out of the recession in the third quarter. (Remember: Good news is BAD news for interest rates), That combined with the excess supply in the markets just caused a sell off that went out of control, and it appears that Uncle Sam either did not step in to calm things down, or it was so out of control that they could not settle it down.

I read an article that there were "shoots of Green" in the economy.  Far from the rumor that we are getting better over night. One of the shoots of green: Refinancing, helping put cash back in home owners pockets to spend.  Wednesdays blood bath wiped out refi's with a HUGE surge in rates, about 1% higher than our most recent lows.

So the Good news, After a really choppy day trading on Thursday we saw slight gains at the end of the day, and today we are seeing a strong rally in the MBS markets.  Currently (Friday Noon EST) Fannies are up 27/32 and were up 9/32 yesterday. So by the end of the day we may be lucky to wipe up most of Wednesday's spill. It appears that the Fed has stepped into the Mortgage market and is buying MBS.  That's Great news for interest rates and it should bring us back in line with where we should be based on current economic conditions.  It just shows how volatile and emotional the markets can be, rumors often move things more than the facts.

So we have had a short 4 day week with more ups and downs than a roller coaster. Some times I just LOVE my job!

Have a great weekend!

Rob

Robert Rauf

Mortgage Banker

www.RobertRaufHomeLoans.com   or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

Since 1987 I have been helping my clients fulfill their dream of home ownership!

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