INTEREST RATES IMPROVE .25% – 30 YEAR FIXED TO 4.375%

INTEREST RATES IMPROVE .25% – 30 YEAR FIXED TO 4.375%

July 15^th, 2013

Interest rates gained some positive momentum after the worst day for interest rates in over 10 years on Friday, July 5th. The market is rebounding, which can often happen when rates move one way very quickly, signaling a possible overreaction by the market.

The Mortgage Backed Security market closed last week trading up + 118 bps and closed Monday, July 15^th trading up + 35 bps. Although interest rate pricing is still not at prior to 4^th of July levels, interest rates improving 5 of the past 6 days is a step in a positive direction.

Last Wednesday was interesting in that we saw the release of the FED minutes from the June FOMC meeting and Ben Bernanke delivered a speech later in the day. The FED minutes showed that about 50% of the FED wants to taper the QE stimulus in 2013. This further confirmed the market’s belief that the FED’s asset purchasing program would soon be coming to an end. Then later in the day, Ben Bernanke made a vague speech stating that the FED planned to keep monetary policy positive for business and that the US economy was still not where they wanted it.

Basically what we are seeing is Bernanke back tracking a bit because no one though interest rates would move up this quickly.

On Wednesday and Thursday, Bernanke will be testifying before the House and the Senate. Expect further volatility depending on how he answers Congress’s questions. If he gives the impression that QE will last through the end of 2013, I would expect to see rates improve.

Until the FED plainly states it’s direction, volatility in the market will continue to be the norm. When the FED finally does end it’s QE stimulus, expect rates to jump quickly.

Make it a great week!!

BEST VALUE OF THE WEEK:

5/1 ARM at 3.375% with 0 points

TODAY’S RATES:

30 year fixed: 4.375% – 1 point, 4.625% – 0 points, 4.75% – $0 costs

20 year fixed: 4.125% – .81 points, 4.25% – 0 points, 4.625% – $0 costs

15 year fixed: 3.5% – .73 points, 3.75% – 0 points, 4% – $0 costs

5/1 ARM: 2.875% – .98 points, 3.375% – 0 points

7/1 ARM: 3.25% – .96 points, 3.875% – 0 points

10/1 ARM: 4.125% – 1 point, 4.625% – 0 points

30 year fixed FHA: 3.875% – .6 points, 4% – 0 points, 4.25% – $0 costs

15 year fixed FHA: 3.25% – .85 points, 3.5% – 0 points, 3.75% – $0 costs