Mortgage Minute: The More Things Change, The More They Stay The Same

By Rob McNelis

On Tuesday Mortgage Backed Securities (or MBS), which are what home loan rates are most closely tied to, had a bad day closing down 31 basis points. This was due to both the technical ceiling of resistance at the 200-day moving average being hit with not enough momentum to break through, and hedge fund managers once again feeling concerns over Fed tapering this year. The latter of the two reasons is the more difficult one to wrap our brains around. 

The concern is now that the Fed is purchasing too much of the entire MBS market. When the Fed first started purchasing $45 billion a month of MBS and $40 billion a month in US Treasuries that only represented about 40% of the market. However now that refinances have reduced by 60% and purchases have not increased, the same $45 billion now represents 68% of the market and could reach 80-90% by years end. This is why investors are concerned that the Fed will control too much of the market and what will happen when they want to start dumping Mortgage Bonds?? This uncertainty in the market has me leaning towards a “locking” bias until we see some economic data that shows a clear direction for MBS trading.

Please watch the attached video to see where home loan rates are at today. If you would like to talk about your specific scenario or needs, please do not hesitate to call or email me directly. 

This statement of current rates is not an offer to enter into an agreement for a loan at a specified interest rate, number of points or both. Current interest rates and discount points are subject to change at any time without notice to you. Stated rate examples were calculated using a $300,000 loan amount, 80% LTV and 720 Min Fico at the stated term lengths.  Licensed by the Dept. of Business Oversight under the Ca Res. Mtg. Lending Act.– 431-0421; Rates and charges in the advertisement do not apply to all loans made by the financial institution.

Rob McNelis
Loan Officer - NMLS# 830519
Direct: 619.279.6162
robm@summitmortgage.com
www.robmcnelis.com
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