Ok folks this is the patented Fannie Mae 5.50% mortgage bond; the only true benchmark for the mortgage market. I have charted this going back 12 mos. so you get a flavor for what I am about to post.
For those who know me, understand I have 3 passions: my kids, politics, & mortgage planning.
I take great pride in the fact that I am a mortgage news "geek." So here is where we be:
- Our benchmark Fannie Mae bond was up 41 basis points today
- Mortgage rates will drop tomorrow as a result
- The lowest 30 year fixed in today's market was posted at 5.625% at .125% discount
- I charge a 1% origination for that bond price. {meaning 1% origination +.125% discount}
- My competition was all at 5.875% even 6% today
- At 5.875% today I am charging no points or lender fees
Now moving ahead . . . .
Wednesday we have ADP National Employment Report.
The ADP National Employment Report is a measure of nonfarm private employment, based on a subset of aggregated and anonymous payroll data that represents approximately 392,000 of ADP's 500,000 U.S. business clients and roughly 24 million employees working in all 19 of the major North American Industrial Classification (NAICS) private industrial sectors.
POTENTIAL IMPACT ON INTEREST RATES: HIGH
Other than that I am sleeping until Friday and might open one eye to take a peak at hourly earnings, non-farm payrolls & unemployment which may have an impact on mortgage rates.
Keep in mind that mortgage bonds hate inflation. Just as those on a fixed income hate rising price, so do investors who commit to a 30-yr mortgage at say 6%. Assuming inflation is on the rise, the purchasing power of that 6% dividend every month will diminish in value and investors will demand higher rates.
We hit that sentiment last Friday and today there was a significant "flight to quality" as investors sought bonds and mortgage bonds (FNMA) for safety.
As always be smart with your money and entrust your refinance or purchase decision to a pro who can answer these 4 questions when rate shopping:
- What are mortgage rates based on? {hint: mortgage backed securities and not the 10 yr t-bond. If they say the 10 yr t-bond, run don't walk}
- What is the next economic report that may affect interest rates? A pro will have at their fingertips.
- When the Federal Reserve Board cuts short term rates, what happens to mortgage rates? Yes, in 99% of the cases they ALWAYS rise.
- Do you {my entrusted mortgage broker} have an opinion on the market? What you are really looking for is .... is it really appropriate for me to do something now if rates are dropping next month? Again, a pro will always have an opinion to save you money.
That's all for now . . . My new seminar has been published and entitled:
MORTGAGE PLANNING FOR DUMMIES 2008/2009
IF YOU ARE IN THE NORTHERN CALIFORNIA AREA, YOU CAN BOOK ME TO SPEAK AT YOUR OFFICE FOR FREE.
As always . . . be safe with YOUR money!
Mike Smith
916-813-4003
Comments(1)