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Quick Update - Rates Trading in a Range

By
Mortgage and Lending with Wells Fargo Home Mortgage 461452

 

 

     Last week was eventful and this week has a few "market movers" in store for us.  This week we'll see Retail Sales numbers as well as CPI.  Both of these will give the market some insight as to the current direction of the economy. The consensus is that we are still in a strong decline, especially after the Jobless Claims figures that were released last week. 

      The Fed's commitment created greater security in mortgage bonds and the market responded by investing heavily in these low risk instruments.  In an environment where investors are scared to death, they love having a bond that pays a decent return (short term treasuries are paying close to 0.00% right now.  Yes, I said near 0.00%!).  So, why do you care.....well, maybe you don't.   But, I'll explain anyway:  mortgage bonds are sitting at "all time high" prices and have been stuck in a "trading range" for over three weeks now.  The only thing that will help bond prices climb higher (and rates drop further) will be another major market event.  More likely is that bonds will stay in this range as long as the Fed continues to buy mortgage debt and as long as the economy remains in the doldrums.

 So, rates are in the high 4% - low 5% range.  We all know what's happened to home prices.  The Fed is offering a great tax incentive (a $7500 tax credit along with the other usual deductions) for making a home purchase.  There are still some down payment assistance programs available. In addition, VA & Rural Housing are great 100% programs with good rates and no mortgage insurance.  Anyway, there are so many more reasons to purchase a home right now....in fact more reasons that at any time in the past decade.  If you need an analysis for a client, friend, relative, or co-worker, just let me know. 

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