Weekly Mortgage Update

UGLY UGLY UGLY… is all that can be said for this week for bonds as rates continued to climb into the high 4% range. 3 Reasons:

1st – Stocks:

The tax cut extension will help the economy (or so goes the thinking) so money ran from bonds to stocks in hopes of higher returns. When money runs away from the bond makers, for us that is Fannie & Freddie, rates have to go up to entice the money to stay in bonds

2nd – Inflation:

The cost of the tax cut extension and the extension of unemployment benefits will add even more to the deficit, which is inflationary. When fears of inflation return, investors raise their rates to compensate for what inflation will take away from future dollars.

3rd – China:

China is raising rates to help cool off their inflation. We live in a global economy and so when one major player starts raising rates, others often have to follow suit.

It all added up to a disastrous week for bonds and mortgages.

This week 30 yr. fixed rates ranged between 4.25% & 4.875% depending on program, credit and points.

Ted Clay
Sr. Loan Officer
NMLSR # 217991
OK License # MLO01963

Office: 405-341-8644
Cell: 405-826-1320
e-Fax: 1-866-208-5309



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