Rates Continue to Move Higher...

Interest rates for home mortgages continued to inch higher as pressure from the equities market is weighing heavily on bond traders. To put things in persepctive we've seen a 50 bip swing in the ten year treasury yield, and mortgage backed securities have followed in form, selling off to the lowest levels we've seen in over a month.

Remember lower price means higher yields, and higher yields mean higher interest rates for home loans... so here we sit at new lows... even so, I'm not completely negative on interest rates, contrary to what some may be thinking.

What I think we're experiencing is severe volatility. severe enough to push our market so low that many are prepared to declare it the end of low rates... in reality I think we're going to see the mortgage backed securities market surge forward in price bringing rates down yet again, perhaps even lower than what we recently experienced.

Why you ask?

It's become clear that we no longer live and operate in a free market. This is not a debatable statement, governments and government intervention is now the lead indicator for our markets.

The most recent example of this is the Euro officials coming out and saying they've figured it all out and there now nothing to worry about, they've got the Euro mess under control and will have the published plan that will save everyone available by the end of the month. This revelation I found fascinating... because the markets ate it up and have been buying equities ever since as if they really do have a solution, and everyone will be "okay."

Forgive me if I am not going to buy into that particular piece of propoganda, and I am under the impression the false promises are going to come full circle and kick everyone in the ass when equities figure out the real truth and a major sell off insues.

At this point in time we'll see everyone run back to bonds, and rates will fall through the floor.

My advise is get your ducks in a row so you are prepared to take advantage of the market when it returns... those that wait to hear about low rates are certain to miss the boat.