If you've been paying attention, you know that I have the heart of a trader. I try to offer analysis rather than opinion. Last week, I felt the bond traders were overreacting to optimistic economic news and commentary by politicians. I generally ignore those folks and focus on the Fed. I said that one of the first rules of investing was "Don't Fight The Fed"; I won't.
This morning's par mortgage rates (with 1%origination fee):
Last November, The Fed released this:
Yesterday, Fed Chairman Ben Bernanke said this:
Bernanke might just be off the "support the MBS market" bandwagon. If he ain't opening the Fed checkbook, expect mortgage rates to naturally gravitate towards the 6% plus level by the end of the year. This won't happen immediately so there will be periods of market overreaction, which will cause me to issue a "float" recommendation. Generally speaking, my bias has changed from "there will be sunny days tomorrow", for mortgage rates to "there may be a storm-a-brewin'".
I've got you locked if you're closing your loan before June 21. Today, I'm locking anyone who is closing by July 15, 2009. The past two weeks have been a fun ride and many of you got 5% mortgage rates by being patient and nimble. The tacit change in Fed bias has me too worried right now; lock all loans at application.