Rate Update January 23, 2009
Fixed mortgage rates are even with yesterday.
Yesterday the Federal Reserve Bank of NY reported that the Fed purchased $19 Billion in mortgage backed securities between Jan. 15th and Jan. 21st. This brings the total amount to $52.6 Billion (around 10% of the total $500 Billion being purchased through the end of June.
You may be asking yourself, “Why has Aaron recommended floating a rate lock for the last week and a half as interest rates have continued to increase?” Well, from a technical and fundamental standpoint Mortgage Bonds are still trading above a floor of support that we tested yesterday, early January and even back in December. Meaning that there is still a good chance that Bonds will someday soon peak once again causing Mortgage Rates to fall. Many of my clients have locked during these times because they are not concerned with a quarter percent here or an eighth of a percent there. However a client’s risk tolerance may be, I still see a great possibility that rates can get better from where they are now, and for that reason I will continue to advise to float looking forward.
I mentioned the other day that when rates do dip again, and remember it may not be down to the lowest levels we have seen, that locking in your rate will be imperative. Though we may have a few months of low rates left…the market may be signing a different tune come this summer. What could happen this summer? Oil prices could be on the rise as we approach the driving season, an economic stimulus package could start to gain footing, and our Fed will stop buying Mortgage Backed Securities. These events could all cause rates to rise from the low levels we see today.
Outlook: Floating