Fed Meeting contains few surprises, Mortgage Backed Securities don't like it

By
Mortgage and Lending with Guild Mortgage Co - Oak Harbor WA

Well, another week is nearly gone and we have seen more action, both up and down on the mortgage market. So, where did we end up after the Fed’s announcement yesterday? Well, no surprises, they aren’t going to lower the rate to less than zero. However they did say some things in their announcement that mortgage backed security buyers didn’t care for, like, "economic conditions are likely to warrant exceptionally low levels of the Federal Funds Rate for some time" and that "inflation pressures will remain subdued in coming quarters".

I am afraid that comments like this will continue to keep some people on the sidelines. The other interesting information that came out yesterday was that the Fed would continue to purchase MBS even through June. However, we found out that the Fed was buying 5.5% and 5% bonds and those are the ones that will be paid off in a lower rate so the Fed will get their money back sooner. The one thing this doesn’t do is lower rates to 4.5%.

Economic data continues to be on the down side as we have higher unemployment figures and more announcements of layoffs make the news. We continue to have a very volatile credit market, so hang in there.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Mortgage / Finance
Groups:
Realtors®
Mortgages
Eugene Oregon Real Estate
Club Chaos
Internet Empowered Consumer
Tags:
interest rates
federal reserve
fed meeting
mortgage backed securities
fed policy

Spam prevention
Show All Comments
Rainer
55,339
Cecily Parks
iMove Group, Knipe Realty NW, Inc. - Salem, OR

I'm hanging in there, Fred!!!!

Jan 29, 2009 08:34 AM #1
Ambassador
668,508
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

Fred: Thank you! It used to be as simple as the fact that if the 10 year note was strong (and it usually ran counter to the stock market), mortgage rates would remain low. Now, it seems to be a crapshoot. I still think that rates may touch the low 4's, especially if the paper market can sustain itself without government assurances. We'll see. Right now the margin on loans is 2.5%. Normally it's 1.75%. Let's hope it returns to normal. That's the key. Thanks again!

Jan 29, 2009 10:41 AM #2
Rainer
171,765
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Cecily - I appreciate the way you take me literally.

Paul - The laws of supply and demand are driving rates right now, more so than the price of bonds.

Jan 29, 2009 11:37 AM #3
Rainmaker
643,145
Marchel Peterson
Results Realty - Spring, TX
Spring TX Real Estate E-Pro

Going to be a bumpy roller coaster ride.

Jan 29, 2009 02:15 PM #4
Rainer
171,765
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

I hope you have your seat belt on Marchel.

Jan 29, 2009 03:41 PM #5
Rainmaker
2,189,919
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

I was wondering where they were going because .25 to zero leaves no place else to go.

Elizabeth Weintraub Land Park Real Estate Agent in Sacramento

Jan 30, 2009 02:49 AM #6
Rainer
171,765
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Elizabeth - I am waiting until the rate is a -1 or -2, so they pay us to borrow money. LOL. Seriously, I sometimes wonder if there are people out there that think this is going to happen so that is why they are waiting.

Jan 30, 2009 02:54 AM #7
Rainer
333,705
Danny Thornton
R & D Art - Knoxville, TN
WordPress Guru

Fred, even though the market is this volatile, I have seen an upswing in applications as well as closed and funded loans through our company.

Jan 30, 2009 06:27 AM #8
Rainer
171,765
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

It is an interesting time. I think some of the fence sitters are beginning to get slivers Danny.

Jan 30, 2009 06:29 AM #9
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainer
171,765

Fred Chamberlin

Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant
Ask me a question
*
*
*
*
Spam prevention

Additional Information