Mortgage Market Recap for the Week of October 20th 2008

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Mortgage Rate and Market Recap for the Week of October 20th - 27th, 2008

Big News for Bonds

As we’ve talked about in the past, mortgage rates are based directly off of mortgage backed securities.  These are much like stocks, being traded throughout the day.  This is also why mortgage rates change throughout the day.  If you’re curious what mortgage rates are going to do, it helps to be tuned into what mortgage backed securities are doing.

Last week PIMCO (the worlds largest bond fund) announced that they were raising their stake in mortgage backed securites to be the largest they’ve had in seven years.  Obviously when investors saw PIMCO take this stance, they quickly followed.  Mortgage rates improved early last week on this news.

Volatility Continued

Honestly, I’m sick of the word.  Volatility.  It’s all I say anymore..so, I’m open to alternatives.  With that out of the way, mortgage rates did see improvements earlier last week after PIMCO’s news.  However, as other news was digested by traders, mortgage rates ended up trading back to where they’d opened.  There was a two day window to capitalize on the improvements we’d seen before the gains were lost again.

What Did Those Reports Say?

Each week, I put up an economic calendar of news coming out that following week.   Here’s the what actually happened with those reports last week:

What Impacts Mortgage Rates?

If you’re looking to purchase or refinance a home, it’s important to know what moves mortgage rates.  There are normally two major things that impact the direction:

1. Economic News.  (Like the calendar above).
2. International News. (major events, pending legislation, war related news, etc).
3. Stock Market. (Money flows from equities (stocks) to bonds when it seeks shelter).

What Are Rates Based On?

It’s been mentioned before, but as a common reminder - mortgage rates are only based on one thing.Mortgage Backed Securities (MBS).  The only way you have access to these is through live bond quotes.

Looking For Mortgage Rates?

If you’re looking for specifically what mortgage rates are doing, I’d be happy to help with a custom rate quote.  Each scenario is different (there are 27 different factors a mortgage rate is determined by).  If you or someone you currently know are looking for a mortgage, I’m here to help!

Information without obligation.  That’s my policy.  If you like what you hear, my team would love to help!