Mortgage Backed Securities (MBS) prices continue to climb this morning as economic data released today show the recession deepening due to mounting unemployment, plunging home values and frozen credit markets. The FNMA 4.5% coupon is up 15/32 so far this morning, and is at the high of today's session. Rates should hopefully begin to improve as the traders have returned from their vacations.
Remember, on MBS, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates. MBS closed up 9/32 from its opening on yesterday, and is up another 23/32 in trading this morning. If the trend continues, I expect that mortgage rates will improve by another 0.125% early this afternoon.
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Lew Corcoran |
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Hey Lewis. Pretty informative. What I have noticed here in WA is that (most likely where you are as well) is that I get rate sheets sometimes 3 times per day. The rates are changing so fast, getting that loan locked at the rate you told you cust. is sometimes a gamble. With so many of the new "rules" and not being able to lock our loans upfront, I have found myself running my business 100% (or close) different then in the past. Its almost like a game of chess now, if in the past you had to think 1 or 2 steps ahead, now is more like 5 or 6. Good points and good read
Jeff
I agree. You're going to see mortgage rates drop to historic lows, and lenders will be swamped with mortgage applications. In fact, lenders are so swamped today that many are now repricing for the worse this afternoon to slow up the flood of applications they're getting - despite the fact that MBS prices continues to climb.
Today, I encourage borrowers to apply for a mortgage somewhere - anywhere - now, and get the process started. They don't have to lock in a rate today - they can always float and lock in later. If they do, they'll be in a better position to lock in when the rates do drop again and not miss another opportunity for a great low rate.