Home Loan Interest Rates Teetering

Home loan interest rates today are a little worse than yesterday after a early morning sell off resulting in a sharp downward 8 tick move in the Mortgage Backed Securities market. What was interesting is this occurred just before we saw treasuries climb to almost 3.9000 yield before reseeding, and falling back. As treasuries sank back, the Mortgage Backed Securities market found its footing and recovered slightly to the current level of down 3 ticks on the day.

The interesting thing about this chain of events was the MBS market selling off before the Treasury market posted higher yields. I have not yet been able to identify what news hit the wire to create this frenzy, and when I do, I will post it... regardless this move definitely caused lenders to pause and consider their opening rate sheets. Wells Fargo, already reposted (from what I can tell about an .125 worse in pricing), along with others despite the correction.

Generally speaking the formula for reprices is as follows: they are slow to give and quick to take away. An 8 tick move in secondary is usually enough to trigger a reprice for better or worse, although it should be noted reprices can occur at any time for any reason. In fact banks will sometime reprice themselves out of the market to deter new loans from entering their system because they cannot wearhouse any more loans until they clear the books for the month. All things considered repricing, although it can be measured and predicted, is as much of an art as music... there are fundamentals you must know to play, but every professional's style is a little different. Pricing analysts are the same way when creating rate sheets. They are all looking at the same information, but what is deduced from that information will be independent to each analyst.

Anyway, so there you have it, rates this morning are a little worse off than closing yesterday. But considering the Fed has removed itself from the equation, we should be happy that the market is holding where it is and interest rates for homes are still around or even below 5 percent. This is a fixed interest rate I am currently discussing not a hybrid ARM or ARM product. A 30 year fixed interest rate at 5% or lower... no prepayment penalties, and low cost. Isn't this what everyone has been waiting for? Get off the fence and lock it in now before these rates go up. If you have read any of the posts associated with this blog, then you are well aware of the fact that the trend for interest rates right now is a rising one. This means interest rates will only be getting worse (generally speaking - we all know graphs move up and down, up and down - regardless our trend will be one dominated by a downward force which results in higher rates).

Don't wait for inflation... if you do you will have missed the boat. More on inflation tomorrow.