The mortgage industry injection

Well, Quantitative Easing II is here! The FED announced 600-800 billion in securities purchases through Q2 2011 at the most recent Fed meeting which concluded on Wednesday Nov. 5th. There was not much point in commenting at the time, because in addition to the market worthy event, we had an election and results to deal with. Now that everything has slowed down and the markets have had time to digest the "results", it time to take a look at how we in the rate watching industry have been affected.
To start, as was forecast, rates are hovering at all time lows. By specifically acknowledging the future purchases of financial securities, the FED has, for all intents and purposes, thrown their weight(and considerable where-with-all) behind the saving of the economy. The intended effect is to keep borrowing costs low to stimulate an economy that is barely trudging along. To that end, it would appear to be working. There is no denying that the FED is playing its last hand(they already lowered the borrowing rate to effectively "zero%"). There is not a lot of wiggle room if the latest purchases don't do enough to stimulate the economy. In addition future considerations about impact on inflation have yet to be measured.
Don't let your eyes stray from the prize though......Interest rates look to stay low for the foreseeable future. At this juncture, it is more important to note that one of the hopes of the latest round of QE is to relax the lending standards of the banks. To date, it would be offensive not to admit the banks are hoarding cash right now, and with the federal reserve explicitly backing the securities market, it would be nice to see banks make the money more accessible to consumers while we see these historic low rates.
The time is past to sit on the fence. This "event" is the one we have been waiting for. QE may or may not be good for the economy, but at the very least, in the short-term it is a boon for those well qualified to take advantage of the lowest rates ever offered.

Calm and quiet before election and FOMC results

Not much to report this morning as we are seeing low volume trading.. Rates are still higher than the close of last week but holding steady from Monday. We don't expect to see much movement either today or tomorrow morning till the FOMC announcement Wednesday afternoon. The stock markets have been rallying in the expectation of a major decision concerning Quantitative Easing II. This could have very positive influence on lowering interest rates in the weeks to come. Stay Tuned! As the saying goes "play the range till the range plays you".

Interest Rates Waiting Period

Happy Halloween for all our readers out there, I hope you all had a nice holiday, your dentist is certainly excited to see you all and your children soon!

The scares and frights should be over now...we are closing in on election day and more importantly the FOMC meeting which concludes on the 3rd. That is the date that this author thinks the FED will introduce their next round of Quantative Easing. This event is expected to drop borrowing costs back to record lows, and we should see rates dip down to 3.75%range in the coming weeks.

A few weeks back when the FED first menitioned the possiblity of another round of QE, the bond market got way ahead of itself and we saw rates fall dramatically, since then the exuberance has subsided and we have seen rates steadily climb. Remember, this is a traders market and a trader is always looking to make some profit. The over-enthusiasum led to a pickup in day trader momentum and led to a short term trend of rising rates....

Moving forward all eyes are on what exactly the FED will do this coming Wednesday. There is no reason to believe that they will not introduce another round of QE, to what extent and in what manner is the question. Till our "d-day" keep your eyes and ears open and hopefully you work with a skilled Loan Originator who has his finger on the lock trigger in the case that the FED pulls a fast one on us.