|The Middle East continues to be the major influence on the world money markets and the ‘flight to safety’ effect continues. In case you are new to my updates, the ‘flight to safety’ effect is simply the idea that if someone is going to give you their money anyway, you don’t have to give them as high of an interest rate to get it. When people are scared, they want a safe place to park their money (US bonds and mortgages) so they don’t lose it. As a result, interest rates offered can be lower because the money will flow in regardless.
Last week I mentioned how the Middle East unrest might spill over into Saudi Arabia and this week it did. This scared the world markets, oil spiked, and mortgage rates dropped as money poured into the US bond market. However, the Saudi government is not about to let things get out of control and today’s planned ‘Day of Rage’ failed to take off due to a MAJOR effort on the part of Saudi security forces. As a result, oil is down and rates have ticked back up.
SO it’s hard to predict when the unrest will end, but we continue to have good economic data with retail sales coming in above last month and this is inflationary. How do you advise your clients? Well, Bill Gross, who runs Pimco (the worlds largest bond mutual fund), has sold ALL his Treasury positions. This leads me to believe that the BIGGEST PRIVATE INVESTOR in the world has decided that rates are headed up. You decide, but I’d follow the smart money.
The Oklahoma State Bond Authority Announced today that they have extended the closing date on the 2010 A Bond Program till the 25th of May 2011. There is still just under $2,000,000 available with a rate of 5.50% and 3.5% Down Payment Assistance.
This week Freddie Mac’s 30 yr. fixed rate survey ranged between 4.75% and 4.875% depending on program, credit and points.
Sr. Loan Officer
NMLSR # 217991
OK License # MLO01963