This entry was posted on Thursday, February 28th, 2008 at 3:35 pm and is filed under Mortgage Rates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Sacramento Mortgage Rates: Was That the Bottom?
A few weeks ago, the Fed made an emergency rate cut of 75 basis points followed by another 50 basis point cut at their Jan 29th meeting. Mortgage rates plunged briefly but then turned and exploded higher in a climb that lasted several weeks and carried the 30 year fixed back up into the 6.25% range. Consumers were confused, and many lost out as they waited and hoped for rates to fall even further.
The 30 year fixed stands at 5.875% once again this morning as Bernanke’s testimony yesterday and the stream of economic data point to economy with the brake pedal mashed against the floorboard. With oil brushing up against $102 a barrel and the specter of inflation dancing gleefully on the horizon, the Fed still seems more concerned on balance about the recession that “we’re not in”, which tells you something about how bad things look to them.
Mortgage Rate Forecast
Rates are improving this morning, but don’t wait for them to plunge. This is just part of the weekly cycle of volatility that consumers will have to watch carefully in order to lock in a good rate. The driver for mortgage rates isn’t the Fed action, not the recession, not even liquidity; it’s all about risk.
Forget about watching the 10 year Treasury for clues about mortgage rates. The correlation that existed was due to the fact that investors thought mortgage back securities and the U.S. Treasury 10 yr Note held about the same amount of risk. Guess what they think now.