|Last week I mentioned that technical signals indicated rates might rise in the near future and that is what happened this week. Adding to last week’s better than expected economic news was a better than expected jobs report showing that we might just avoid the “Armageddon” of a double-dip recession. Add to this Fed President Bullard’s comment that while the second half of this year will be slower, he does predict a pick up in 2011, and you have an overall ‘better than expected’ outlook.
As a result investors continue to take profits off the table and abandon their “safe haven” bond positions. This has the effect of pushing rates higher for the sixth trading day out of the last seven. Remember, as traders take their money out of bonds (mortgages are bonds) mortgage rates have to increase in order to entice the money NOT to leave and go buy stocks.
Yesterday’s bond auction of 30 year US Treasuries underscored this by selling at a net effective interest rate that was HIGHER than what the 30 Yr. Fannie Mae Mortgage Backed Securities are selling for. Even Uncle Sam, the safest haven in the world, is having to raise rates to keep people interested in giving him money.
The Bond Authority reduced the interest rate on their money effective today to a rate of 4.75% and still have the Down Payment Assistance of 3.5%. They have also extended the closing dates to November 30th 2010. With this reduction in the rate I do expect that this money will go much more quickly. Right now there is $23.8 million available! So if you have buyers that are needing down payment assistance this should be attractive.
This week 30 yr. fixed rates ranged between 4.25 and 4.375% depending on program, credit and points.
Sr. Loan Officer
NMLSR # 217991
OK License # MLO01963