I'm still floating mortgage rates, unless my clients are closing within 14 days. I"m cautiously floating because of the volatility in the market. Fundamentally, mortgage rates shouldn't have a whole lot more room to come down; the Fed cuts are probably coming to an end. Something much more drastic than the Fed open market activities will be needed to pull us out of the recession.
Yep. I said the R word and have been since last fall. I'm not scared of the recession; I welcome it. Here's the trick for mortgage rates. The weak dollar has world investors believing that the Fed's easy money policy is inflationary...
UNTIL...
the recession hits them. Make no mistake about it, the economic slowdown is a global phenomenon. Canada and the UK are following suit by cutting rates. I think the world wide recession will lower oil prices and provide some much needed relief to the American consumer.
Nothing says it like pictures. I'll show you some charts, to see how I'm thinking.
One Month FHLMC 5/1 ARM Mortgage Rates
Look at the one-month rate chart (linked above). We were at 5.5%, on March 13, 2008. We rose to 5.7%, on March 30, 2008, and declined to 5.6%, today.
Something's wrong!
Look at the one month mortgage-backed securities market! It doesn't look like a mirror. The bond prices have advanced but the mortgage rates haven't come down. The mortgage rate (for the 5/1 ARM) should be down to 5.3% (or lower).
That's signaling one of two things: lower bond prices, this week, or lower mortgage rates, this week. I think the recessionary fears will keep mortgage bond prices high, so I'm opting for lower mortgage rates.
This is what an experienced mortgage planner does on the weekend. Why? To get you the best rate execution, of course. The value of an experienced mortgage planner can save you thousands of dollars by knowing WHEN to lock and when NOT to lock your mortgage rate. Call me at 858-777-9751 to find out how it can benefit you.
