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Mortgage Rate Trend
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From a purely technical standpoint, rates should be
going up. However, the government's ownership of the the
two biggest dogs in lending, i.e., Fannie Mae and
Freddie Mac, make it nearly inconceivable high rates
will rear their ugly heads during this crisis. To add
even more "salt to the soup," we have the roller coaster
known as the securities markets. Strange times, my
friend. Strange times.
Dan Dowling, senior mortgage adviser/president, United
Mortgage Capital Corp., Altamonte Springs, Fla.
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New liquidity created by (the) bailout plan and weak
numbers in employment will increase demand in
mortgage-backed decurities.
Sean Rafferty, author of BayAreaMortgageReport.com, San
Jose, Calif.
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The 10-year Treasury is currently at 3.74 percent. It
has been a very bumpy week in the interest rate market.
As the bailout takes shape, we will see the market
settle and interest rates head back down to the level we
saw a few weeks ago.
Mitch Ohlbaum, president, Legend Mortgage, Los Angeles
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Stock market valuation swings, combined with (the)
market estimate of future volatility spiking to all-time
highs (VIX), have produced a volatile period for the
debt markets, but mortgages through all of this have
remained fairly even, moving in pace as expected.
Consider however, (a) 1-point movement in price (or an
increase of 22 bps, 0.22 percent) is no small move for
mortgages, but on a relative basis, nothing has been
shocking. So while movements may be large net change
after the smoke clears, we should see rate moderation
for the next few weeks.
Cameron Findlay, chief economist, LendingTree.com,
Charlotte, N.C.
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With the bailout plan still up in the air (and) consumer
sentiment down, we will have to restore confidence in
international investors to buy securities, which will
drive rates down.
Steve Levitt, vice president of mortgage lending,
Guaranteed Rate, Chicago
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Defeat of the government rescue plan earlier this week
really threw the financial markets for a loop.
Ordinarily we would have expected the mortgage bond
market to be the beneficiary of this uncertainty, but it
was not the case. While mortgage rates are slightly
higher this week than last, this should be tempered by
Friday's unemployment report, which is expected to show
a continued rise in unemployment. Remember, bad economic
news is typically good news for mortgage bonds. Until
next time, strap on your seat belt and enjoy the ride!
David Kuiper, mortgage planner, First Place Bank,
Holland, Mich.
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Expect a stock market bounce to pull dollars from
mortgage bonds, pushing rates higher.
Dan Green, Mobium Mortgage, author of
TheMortgageReports.com, Cincinnati
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It is easy to get slap-happy at a time such as this and
say something like "There is a 50 percent chance that
mortgages will exist in four to six weeks" but I will
not do that. Assuming that Congress passes the liquidity
bill, there will be two forces driving mortgage interest
rates in opposite directions. The liquidity created by
this bill will massively increase banks' ability to
lend. This will drive rates lower. On the other hand,
the techs are signaling that they are overbought to the
extreme, which should send Treasury yields higher. Thus
we may likely see the oddity of Treasury yields
increasing while mortgage rates fall. One more point:
The end of (the) investment bank model on Wall Street
also means the end of practically every player in the
jumbo MBS market. If jumbo mortgages are going to
reappear, it will take some new calculus to securitize
them.
Dick Lepre, senior loan officer, Residential Pacific
Mortgage, San Francisco
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Rates should improve off a stabilizing market and weak
jobs report.
Barry Habib, CEO, Mortgage Market Guide, Holmdel, N.J.
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I see economic news continuing to show weakness, which
should lead to lower mortgage rates. The big question
is: What type of package will Washington get passed and
how will the markets respond? Also, 45 days from now, we
will know who will be sitting in the White House for the
next four years. So while I say lower, it is based
solely on economic sentiment, and that is likely to take
a back seat to other events as they unfold over the next
few weeks. Bottom line, when you can get a rate that
works for you, lock it and don't look back.
Jim Sahnger, mortgage consultant, Palm Beach Financial
Network, Stuart, Fla.
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