Another wild ride on Wall Street - Today's mortgage update

Today the Fannie Mae 5.50% bond gave up significant ground and as a result mortgage rates climbed dramatically with three re-prices during today's wild ride.  I save 2 clients over $6,000 today in mortgage fees by locking ahead of these dramatic price movements. 

Atlanta Fed Pres Dennis Lockhart today made an opine that "foreign investors may pull out of US credit markets."  Of course this spooked the markets.   

Further, Dallas Fed Pres Richard Fisher stated "that the Fed is priming the pump and with all these short term rate cuts inflation will be a problem."  This guy was totally off point, rambling and as a result spooked the bond market.  Couple that with an extremely weak T-Bond auction and you have mortgage bonds slipping down past what we refer to as our first support level. 

Now interestingly, if you look at the US recessions in 1990 and again in 2001, when the 4 week moving average for unemployment claims hit 360,000 that signaled the start of the recession.  Our 4 week moving average right now = 338,000; however our 2 week moving average = an astonishingly high 367,000. 

So what does all this mean? 

Mortgage bonds hate inflation.  Rate cuts that stimulate the economy are inflationary unless the economy is in such dire straights that inflation is deemed negligible.  At the moment with CPI (consumer price index) 12 mos moving average at 4.1%, we are in the unique situation where inflation is still a problem, yet we are slowing down economically. 

So at this point, we are advising to make sure the mortgage professional you are using understands in real time what is happening and can advise their clients.  I make sure my clients have their applications in and we are in position to lock when necessary.  The markets can move extremely quick sometimes giving me a window of 10-20 mins from what I am watching before our investors start to reprice and therefore increase mortgage rates. 

You don't want your mortgage broker reading yesterday's paper looking for clues on how to advise a mortgage client today.  No more so than you want your stock broker looking in yesterday's paper for info on a stock today. 

Today's mortgage professionals are:

• Full time
• Certified as a professional in their trade
• Have access to real time info that can benefit their clients ahead of major market corrections.  For example, On Tuesday, 30 year fixed rate mortgages were at par at 5.25% with my major investors.  However today, the cost for that same 5.25% mortgage is 1.50% to 2.125% + origination fees. 

For more info or to be added to my daily mortgage market update, simply email me at:  mortgageplanner@247refi.com