Mortgage Rates hit 4.75 on 30 year fixed

This is a quick update on how the mortgage markets are reacting to Tuesday's announcement by the Fed.  The bond market soared on news of the future direction of the Fed to bring mortgage rates down and support consumer and commercial credit markets if necessary.  We saw the conforming 30 year fixed rate drop to 4.75% with 0 points yesterday morning.  It was a very short lived drop with rates back up to 5% by mid day. 

Today we have seen the volatility settle and we are in positive territory in the bond market (rates go down when the bond prices go up).  I think since the Fed's ultimate goal is to stimulate he housing market and until we see this happen and until the 10 year Treasury reverses and starts going back up our mortgage rates should continue down.  It is good to point out that the 10 year treasury hit a low of 2.18 yesterday and today it is at 2.08.  Every day we see new lows being set.  At current levels in Treasuries we should see mortgage backed securities low enough to give us a 4.25 mortgage rate.  This is where the market wants to go.  The Federal Reserve is just trying to help the system start to work again so mortgage rates can go where they should be.

The commitment from the Fed to lower mortgage rates over the past month has been strong and definitive.  When mortgage rates have stalled and are not reacting to their stimulus they quickly come out with a new action.  I think the Fed is serious about lower mortgage rates and unless we have unforeseen interference they should be able to achieve their goal.  I am not sure what that number is but ultimately they want to see the rates have an effect on the housing market.  As of last Spring I would have said 5% but now it is probably 4.25% - 4.5%.