| Market Insight! Have you metChad? | | | |
| | | Dow is off about 93 points and the FNMA held steady only losing about 3bps today. Rates are still great! Feds purchased about 16 billion or so in Bonds last week. Why are rates still so low even though the feds are spending BILLIONS less weekly? A few reasons: 1. Organic interest in Mortgage Backed Securities. Investors understand that the mortgages offered as securities are better quality than they have been in YEARS. Credit is much more completely examined and Mortgages are underwritten as they should be to create a reasonably low risk and a decent return on mortgage backed securities. 2. Mattress money: Hedge funds and other major investors recognize the above and are beginning to regain comfort levels in the securities 3. SUPPLY vs. DEMAND. Right now, securities offered are from mortgages done about 60-90 days ago. SO: loans originated in August and September are being securitized NOW and offered to the open market. Those months represent loans closing that locked in June, July and August when rates were higher than they had been all year. SO: Fewer loans are being offered as securities and therefore less securities are in the market... When the FEDs buy LESS securities...it is still proportionally about the same as it was when there were many more mortgage backed securities on the market. PREDICTION: (and yes...I am just as UNDERQUALIFIED to predict the future as the next guy...) We have done a TON of mortgages in the last few months with people trying to get in on the tax credit. They will be securitized in the first quarter of next year and maybe as early as late December. The feds will continue to taper off their purchases even though the organic market may continue to pick up some steam and wash that loss of purchases with greater private purchases. We will see a flood of MBS in the market though and rates may come up pretty rapidly with the lack of money being pushed into the market. I would suggest that we will see what are still excellent rates in the 5.5%-5.75% range...in the first month of 2010 that will stick with us for the first quarter. All bets are off with some kind of fed involvement though... Bottom line: no one REALLY knows. Cheers Chad | | Archives: *Written Material Copyright Chad Schauers and use without permission is prohibited. 406 522 0922 | | |
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Chad Schauers
Have you metChad?
MetLife Home Loans
406.522.0922
406.522.0924 (fax)
1924 W. Stevens, Ste. 202
Bozeman, MT 59718
Cell: 406 799 8613
ccschauers@metlifehomeloans.com
