Upward Trend for Mortgage Rates This Week

Bond rating agencies have come under fire for the valuations they ascribed to securities backed by those subprime loans. As downgrades are issued for those offerings, certain investors (such as pension funds) cannot hold the now-lower-rated securities; subsequently, more are likely to be dumped onto the market. These investments will need to be replaced with better-quality assets, such as Treasuries. Demand for those kinds of debts will rise (and yields will be pressed lower than they would be absent this demand) while others, such as mortgages, may suffer a reverse fate, with yields rising, at least for any new subprime mortgages which may be offered. As this happens, we may see swings in pricing, or even a widening in spreads between Treasury yields and mortgage rates. The difference between the 10-year Treasury yield and the average 30-year FRM was as close as 158 basis points (1.58%) in January, but now stands near 2007 highs closer to 175 basis points

DFW Mortgage

Jeff Schraeder

Imperial Mortgage