Mortgage Rates in Evergreen, CO - Market Update March 29, 2010
Mortgage Rates rose last week as we saw extreme volatility in the markets.
The volatility in Mortgage Rates was brought on in part by testimony by Federal Reserve chairman Ben Bernanke that confirmed the Fed will end it's mortgage-backed security program this week on Wednesday. Bernanke commented on the fact that the MBS purchase program was necessary in order to further stimulate the economy after the Fed Funds Rate was lowered as far as it could go last year. Now, the Fed seems to be hinting that they may in fact become sellers of MBS in the near future.
If this happens, it will certainly add downward pressure to bond prices, and send Mortgage Rates up. Simple supply and demand dictates that supply cannot continue to be introduced into the market without bond prices going down. And we saw exactly that last week as well, as the Fed continued to offer new issues of bonds to the markets, and the offering was not well-received. Bonds took a hammering late in the week and the overall result was that Mortgage Rates ended the week higher.
Free Evergreen, CO Mortgage Rates Quote.
The other big report of the week was GDP which came in at a smoking 5.6% for 4Q 2009, the best reading in 6 years. However, the yearly reading was down 2.4%, the worst yearly reading since 1946.
Housing continues to struggle, with reports coming in mixed last week. The only real stimulus to the housing market that will work is an improvement in employment. Low Mortgage Rates and the First Time Home Buyer Tax Credit (expiring at the end of April!) alone cannot bring housing back.
This week will definitely be an exciting week as there is a lot of data hitting the wires. Already in this morning is PCE, a measure of consumer inflation, which came in below expectations at 0% for the month. Inflation remains subdued- for now. This report is good for Mortgage Rates.
Later in the week we could see a lot of volatility in Mortgage Rates as the MBS purchase program ends on Wednesday. There has been much discussion as to the effect of this on Mortgage Rates, and Wednesday will be the day of reckoning. Adding to the volatility, Thursday will bring the Initial Jobless Claims report, always a big market-mover, as well as the Feds announcement of the size of next week's bond auctions.
Friday will bring the monthly jobs report, and the volatility of this report could be extreme. The trading desks will be lightly staffed as it is Good Friday, and the markets close at noon. Any time there is lower trading volume and lower liquidity, the market is subject to more volatility. A poor jobs report will help Mortgage Rates improve, as poor economic data is almost always a positive for Mortgage Rates.
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