Rate Update January 7, 2009

Fixed mortgage rates are level to yesterday.  

 Just as I thought I had seen everything in this market…I witnessed yesterday afternoon.  In late trading, Mortgage Backed Bonds were up 103 basis points, reaching the highest levels ever.  So why aren’t rates down at 4.5%???  And furthermore, why were some lenders even coming out with price changes for the WORSE???  

 The reasoning behind these mysteries is thought to be that with all the layoffs and staffing slashes of 2008 in the mortgage lending industry; lenders have been working at capacity due to the recent refinance boom.  In efforts to slow down the submissions and loan locks, many lenders started increasing rates to stop the flow of business coming in.  I am sure that this won’t last forever, but it is just one more thing that is going to keep this market crazy.  Not only do we not know when Mortgage Bonds are going to rise (and rates fall)….even if they do; now we are uncertain how rates will react.   Having fun yet?

 Current outlook: floating