As we begin a New Year, we're looking forward to new opportunities and what's ahead of us.
For those of you who are in the market to either by a home or refinance your current mortgage, I believe it's important to understand what happened within the past week of 2009 that is going in to 2010.
So here's your weekly mortgage update with the highlights...
Last week there was a $118 Billion T-Note auction by the Treasury Department. This auction added quite a bit of supply to the bond market as well as some volatility. Remember...what happens in the bond market determines which direction long term mortgage rates will take.
Volatility is common during the holiday weekend because the trading volume decreases. And with lower trading volume comes sometimes huge market moves which can cause prices to rise or fall sharply.
2009 brought us some of the best home loan rates ever seen in the history of the US (and some of you are now sitting on rates below 5% on 30yr fixed loans).
But things have worsened over the month of December. One of the reasons is attributed to the Federal Reserve winding down their Mortgage Backed Securities purchasing program and right at a time when there is an increase volume of Mortgage Backed Securities coming to the market.
Now, we all know the rule of supply/demand. Like with any other product, when there's a lot of supply and lower demand, prices naturally go down. As Mortgage Backed Security (or Mortgage Bonds) prices go down, home loan rates go up.
This is what has happened throughout December. Last week rates were able to end at about the same place as they began but have worsen overall about 0.5% from the beginning of December to the end.
If you'd like to get a simple and easy to read weekly mortgage market update, please feel free to subscribe to this blog.
To Your Success ~
Maria
Originally Posted at www.MySacramentoMortgage.com
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