In The News
All Talk and No Action?
September 10, 2011 by andersmortgage · Leave a Comment
The President spoke and announced a much broader than expected plan to stimulate jobs growth. The big question is what Congress in the end will pass and what effect that which is implemented will actually have on job growth. The plan is very much built on the Keynesian model and might not be palatable to some. The markets not really knowing what to expect continue to take a pessimistic view of the future. The stock market dropped significantly this week.
The 10-year Treasury Note hit a new record lows. There is some anticipation that the Fed will do further buying of these notes which could bring the yield as lows a 1.75%. Rates on mortgage backed securities (MBS) dropped as well but not as much as Treasuries. Friday afternoon the FannieMae Current Coupon (which sets 30-yr fixed rates) closed with a yield of 3.11. The previous lowest close was 3.14. We did see the spread between Treasuries and MBS widen. I just don’t think there is much appetite to buy 30-yr mortgage paper at around 3%. Three percent is the kind of rate that people expect on a risk-free CD.
Next week we will see a lot of key economic numbers released. Inflation, retail sales and consumer sentiment will all be reported on. If all that news ends up reflecting the same on the economy it should set a directions for rate for the near term. Good economic news and rates will head up and with bad economic news rates will be unchanged or maybe down slightly.
Mortgage rates are down this the week.
The 10-year US Treasury Note is at 1.92%, down .27% since last week.
Credit Spread (10yr UST vs. FNMA Current Coupon) 1.19, 1.11 last time. This is the widest spread in a long time. I believe that it’s a reflection of investors not being interested in owning mortgage backed bonds yielding 3% or less.
Current 30-year Fixed is 3.99%. Jumbo 5/1 ARM 3.0%.
Of note, the conforming 5/1 ARM is now at 2.5%, the 7/1 at 2.875% and the 10/1 ARM is at 3.375%.
If you have any questions about renovation 203K loans or other mortgage products, or need help with a pre-approval, I am always happy to be of service.
