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Health & Fitness

Mortgage Minute: The Intersection of North Korea and Home Loan Rates

After threats directed specifically towards the US from N. Korea last week, the investment markets had a "Flight to Quality".

Today it appeared as though all was right in the world as the SD Padres won their home opener, and the mortgage backed securities market and the stock market both closed in positive territory. With things quieting down at least for today in N. Korea, the markets looked more to technical signals to decide their direction for trading. This was not the case for the end of last week when we saw a major jump in the Fannie Mae 3% coupon (AKA mortgage bond).

After threats directed specifically towards the US from N. Korea last week the "Flight to Quality" caused investors to jump on the mortgage bond band wagon (driven by the Fed's monthly purchase of $80-85 Billion) causing home loan rates to drop to levels not seen since January. Although the mortgage backed securities market has been able to hold their ground for the last two days, they do not appear to have the legs to continue the rally. Now we do have two very strong levels of support from the technicals stand point at the 100 and 200 day moving averages, but should we hear any talk of inflation from the Fed later this week, we could see a sharp drop in mortgage bonds (which means an increase in home loan rates). That is why I would recommend locking your rate in now since the risk of a sharp increase while floating far out weighs the possibility of much improved pricing.

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.

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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

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