As QE2 draws to an end, stocks are trailing lower and mortgage interest rates are nearing the record lows of 2010. I've recorded a short video to explain where I believe interest rates are headed.
If you purchased in the last six to eight months or missed your opportunity to refinance last year when rates were so low, or if you know someone in that situation, please direct them to this video.
Alert to LOCK
The Fannie Mae 30 year fixed mortgage bond is currently down 50 basis points and we have already worsened points by 1/8th once today. A 50 basis point shift typically moves rates by more than an 1/8th in points so another re-post worse could be forthcoming. Why the rise in rates? The Fed's QE2 policy to purchase $600B in Treasuries is expected to have - some speculate - a "super ordinary" impact on inflation. Just look at gold. Gold is considered a hedge against inflation and it's now trading at a record high $1441. A very important aspect to consider is that inflation - nonexistent over the past two years - erodes bond pricing; i.e., mortgage rates go up.
Lock or Float?
The Fannie Mae bond is currently trading just above an important level of support at the 50 days moving average. If the bond breaks below that level rates may spike up quite quickly. Don't risk it. Rates are just a little worse than last Thursday and Friday but waiting for rates to return to those levels could prove very costly. Advice: lock before 9:00 PM this evening. Remember, to lock, your application must first be pre-approved so the first step is to apply online.
LOCK Ahead of Jobs Report Due Out Tomorrow
The Fannie Mae 30 year fixed mortgage bond is currently up 47 basis points on top of gains both Tuesday and Wednesday. This morning I posted the lowest rates ever to the website. Why the drop? The Federal Reserve Board announced yesterday they intend to purchase $600 Billion in bonds over the next 6 months. Though they will be purchasing Treasuries, not mortgage bonds, the influx of capital into treasuries will result in buying opportunities for mortgage bond investors.
In my last post I warned that rates are headed up and I still believe that is the case. I advised to look for windows of opportunity to lock and here it is. The announcement from the Feds has pushed rates down but tomorrow morning at 8:30 AM the jobs report for October will be released. Analysts are expecting a gain of 60K jobs and I believe based on the ADP report that it could be more. Since these will almost all be private sector jobs, stocks will likely interpret the report positively and thus bond prices will go down/rates up. Advice: lock before 9:00 PM this evening. Remember, to lock your application must first be pre-approved so the first step is to apply online.
Rates at the Highest Point in a Month - Look for a Window to Lock
The Fannie Mae 30 year fixed mortgage bond closed at 103.53 on 20 October, but has fell every day since and closed yesterday at 102.68. Every 12 basis points drop represents .125% higher points/lower closing credit. That means that since 20 October, though rates are the same, the cost for every rate has gone up over 70 basis points, or .75%. I my last blog entry I forecast this would likely be the case and many responded by applying and locking. A slightly better economic outlook and the Federal Reserve chief's recent comments regarding stimulating inflation have pushed rates higher. This morning jobless claims were reported down for the third straight week and stock futures are up before the opening bell.
Rates are headed up so if you plan to refinance to take advantage of historic lows you should apply online and then be ready to lock if a window of opportunity arises. For example, this morning in early trading the Fannie Mae bond is up 25 basis points so rates may be either the same or slightly better than yesterday's close. But that could be a very short opening if stocks respond well to the jobless claim numbers and other economic reports show improvement. My advice, follow me on Twitter and watch for opportunities to lock. My advice this morning will be to Apply and lock. Remember, to lock your application must first be pre-approved so the first step is to apply online.
Rates May Tick Up After Wed & Thu Record Lows - LOCKThe Fannie Mae 30 year fixed mortgage bond closed -12 basis points on Thursday backing off overhead resistence from the record low close on 7 October 2010. The bond is up just 3 basis points this morning as stocks move sideways. Mortgage interest rates have tested historical best levels and have fallen back.
If you've been considering purchasing or refinancing NOW is the time to lock. Interest rates are at new record lows but bond volume is starting to wane indicating that rates will begin to inch up so my advice is to Apply and lock to take advantage of these new historic lows. Remember, we can only lock pre-approved loans so the first step is to apply online.
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