Rate Update September 17, 2008

Rates are sharply higher this morning following a steep sell-off in mortgage-backed bonds yesterday afternoon.

The major piece of news this morning is that the government has stepped in to bailout the nation’s largest insurance business AIG. This is not a huge surprise because of the extent that AIG is intertwined into the broader financial system. Had the government not stepped in the consequences would have been drastic.

The implication of this announcement on mortgage rates is that volatility has picked up. You’ll notice that mortgage rates are sharply higher this morning. Both the stock market and bond market have made acute movements in the past couple days as investors try to interpret these unprecedented events.

For those of you who may have insurance through AIG the research I’ve done tells me that you should be fine. Here is a link to a great article on CNNmoney which provides simple answers.

We remain optimistic that in the next few weeks mortgage rates will come down further. However, it is clear that day to day we may see volatile changes to rates.

Current Outlook: long-term floating, near-term 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.