What's Going On With Mortgage Rates?

Mortgage and Lending with Stearns NMLS #232164 CA BRE #01380812 BRE 01380812 NMLS 232164

My Droid phone keeps beeping at me today as mortgage backed securities bounced up and down

like a beach Beach Ballball.


Mortgage lenders, those who are truly professional, are alerted when bond prices move enough for lenders to "reprice" for the better or worse. Put another way, enough to change the rate you were quoted and have not yet locked in for your purchase or refinance. 

There were 18 reprice alerts as of about 2 PM California time, as mortgage rates bobbed up and down. 

Here's the crazy part, as of the 18th "reprice" alert, after the valleys and peaks, mortgage bond prices ended up almost exactly where they started when trading opened this morning.

Why the volatility?  When the Fed announced Quantitative Easing and the $600 Billion purchase of mortgage bonds, PIMCO, the world's largest bond purchaser began selling into that purchase.  Prior to QE2, PIMCO announced that in their opinion, bonds are at the end of a 30 year run, so the Fed's announcement was an early Christmas present. 

So what was supposed to keep rates down, didn't as we saw recently.

When an intervention like this happens, on top of unprecedented global economic conditions it's harder for traders to make sense of it all and uncertainty creates volatility.

Add to that the news from Washington about tax breaks and leaving extra cash in wage earner's paychecks and it's Bob, Bob, Bob, Bob-Bond-a-Ran. 


Speaking of Beach Balls, this brings to mind a Beach Boys song, with a twist..

(To the tune of Barbara Ann...)

Bob Bob Bob, Bob Bond-A-Ran

Bob Bob Bob, Bob Bond-A-Ran

BOND a Ra' a an

Volatile, Oh Man

BOND a Ra' a an

You've got us rockin and a reelin

Certainty you're stealin'



Now that you're singing and relieving your stress..

Many think that the economic fundamentals do not support these rising rates: Specifically unemployment, housing and GDP.

As others have pointed out, RATES ARE STILL INCREDIBLY LOW and I'm NOT singing the blues.

How about you?

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  1. Jon Quist 12/08/2010 09:41 AM
Mortgage / Finance
Inspired By Song!
mortgage rates rising volatility

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Jackie Bafus
Coldwell Banker First Realtors - Walla Walla, WA

Great post! Rates are going crazy right now but provides us the position to be the educator to our clients. Thank you!

Dec 08, 2010 09:41 AM #1
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