Rate Update March 18, 2008

Mortgage-backed bonds followed through on the rally yesterday pushing mortgage rates to their lowest levels since the beginning of February. Much of this momentum was created due to a “flight to quality” which is when investors sell stocks and reinvest the capital into the “safe-haven” of the bond market.

The big news of the day is the Fed. They are scheduled to announce their interest rate policy at 2:15 EST. Consensus thus far has been that the Fed will cut short-term rates by .75%. However, some analysts now believe we could see a 1.00% cut to the Federal Funds rate.

Our Fed strategy today:

Upon the announcement we may see mortgage-backed bonds “pop” on the news sending mortgage rates lower in the near-term. But, if you are an avid reader of ‘rate update’ you know why we think a rate cut will hurt mortgage rates in the long-term.

Current Outlook: neutral

The views and opinions expressed in this site are those of the author(s) and do not necessarily reflect the official policy or position of Cherry Creek Mortgage Co., Inc. This is for informational purposes only. This is not a commitment to lend.