Seattle Mortgage Reel Weekly Kick Off August 14, 2009
Last week the record Treasury auction had mixed results but overall went well. This improves mortgage rates late in the week. The following week is pretty mellow for announcements.
Fed is scheduled to purchase Mortgage Backed Securities (MBS) through the end of the year, they are only purchasing Treasuries through the end of October. The reason the Fed is buying long-term Treasuries is to maintain the spread between the 30-year Treasury and MBS. Once the Fed stops buying Treasuries, their yields should rise…and that would force yields on mortgage rates to move up so they can stay competitive and attractive.
First time home buyers tax credit expires on November 30, 2009 so please do not wait until the last minute. Currently new compliance laws (Mortgage Disclosures Improvement Act) have started which created mandatory waiting periods during a purchase & refinance transaction. Allow 45 days to comfortably close on a new home. A transaction can be close sooner but depending on turn times I would safely plan for 45 days.
Looking for rates to drop one more time this year? Wall Street has a pull back to show signs of stability and strength. Dow Jones, Nasdaq, and S &P have not been tested so far and have reached high levels again. Depending on the confidence on investors we can see one more fall out before the full recovery takes place.
If this happens money tends to flow out of the stock market and into the bond market. When the bond market gains ground and strengthens, you will see mortgage rates dip to lower levels. There are no guarantees this will or will not happen but prepare yourself for a last minute refinance or if you plan on purchasing timing will be very lucky!
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