Mortgage Minute 3-12-13 "Have Mortgage Bonds Finally Bottomed Out"

Today Mortgage Backed Securities finally closed in positive territory up 28 basis points on the day. This was after have closed lower each trading day so far in the month of March. Since February 28th, the 3% Fannie Mae coupon has dropped about 140 basis points witch means as of yesterday we saw a rise in home loan rates of about a quarter of a point. After today's rally for mortgage bonds there was a slight reduction that may have the legs to continue. 

The stock market rally seemed to finally slow down today based mainly on word from a representative of the European Central Bank where he stated that the Euro Zone is not out of the weeds yet and that they are still on very shaky ground. This news caused foreign investors to turn from riskier stocks to a more stable investment in US Treasuries and Mortgage Backed Securities. The news was also an indicator that the Fed's Quantitative Easing policy may stick around longer than what was originally indicated just a little over a month ago and caused mortgage bonds to be sold off in droves. 

As I have been saying for a while now, stocks are still at a highly over bought level and any negative economic news was going to be heavily scrutinized by investors to the benefit of mortgage bonds as we saw today. Also after hitting a 7 month low in mortgage bonds yesterday, we can see that level is now a good floor of support. I am going to recommend floating right now to see if bonds can continue the rally started today and get us back at least to the 25 day moving average which is still a ways above us right now.

Be sure to watch today's video to see where home loan rates ended up on the day.

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 Corporations 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