Rate Update June 9, 2009

Fixed Mortgage Rates are even with yesterday.

Mortgage Backed Bonds shed over 80 basis points yesterday but are starting to rebound a bit this morning.  Thus far, lenders have seemed to be pricing loans about the same as where they were yesterday morning before the 80 point slide.

Supply, Supply, Supply…it has been all I have talked about the past couple weeks as rates have been steadily increasing (sometimes by .25% per day).  Besides needing to pay for all of the stimulus efforts put forth by the Government over the past 8 or 9 months, this supply is also coming from the fact that so many borrowers have been refinancing.  Over the past 6 months, it has seemed that every borrower who could qualify for a refinance have done so.  The exception being the folks who were waiting for 4.0%…sorry, don’t think that will happen).  These new refinance loans from the past 6 months are being bundled up and sold on the secondary market…again adding to the supply of bonds and decreasing the bond price.  This seems to be putting the Fed in a very tough spot.  On one hand, the purchase of Mortgage Backed Securities have helped kept rates low, and recently slowed down the increase of rates…BUT on the other hand, the onslaught of refinances are starting to hit the secondary market and further adding to the “supply fire”.

Current Outlook: Cautiously Floating