When you look at mortgage interest rates, as compared to where we were last year – you could be pleasantly surprised. Year over year we are quoting mortgage interest that are slightly lower than 2012. When you compare mortgage interest rates with what we were quoting two weeks ago – you will not be as happy. Mortgage rates have followed the path of the 10 year Treasury bill, and we’ve lost some pretty significant ground as mortgage rates move higher. The Economists at Freddie Mac predict that Mortgage Rates For The Summer of 2013, going into the end of the year could be much closer to 4.25%.
Yesterday, Ben Bernanke testified to Congress. The Mortgage Bond Market was looking for information about how much longer the Fed would continue purchasing mortgage backed securities as part of QEIII. The market was very volitle before his testimony, because there have been many Fed Chiefs who publicly announced in the last 10 days that they thought it was time to start winding down (stopping) the program.
As it happened, there was no discussion of dollar amounts the Fed might start tapering down to and they slow the pace of purchasing mortgages. However, the question of how soon would they begin applying the brakes put the entire Stock Market in a spin today. The time horizons disclosed in Bernanke’s remarks were as short as they possibly could be with the chairman himself saying the Fed “could take a step down in the pace of purchases in the next few meetings.” And the next meeting is June 18-19th!
In short, Bernanke delivered the worst case options to the market–or close to them– and because of that, the mortgage market traders pushed mortgage rates up about as fast as they go up on really really bad days.
Bryan McNee, a senior bond analyst with MBS Authority, reports that Bernanke’s statements earlier this month about Mortgage Backed Securities (MBS) purchases have also pushed the mortgage bond market in May. After Bernanke’s statement earlier this month that it was too soon to consider pulling back on the amount of monthly MBS purchases, mortgagee bond sale rallied, causing mortgage rates to get better, McNee reports.
But after a few moments, the MBS bond market sold off dramatically, causing mortgage rates to rise as traders moved past the headlines and focused on the actual content of what Bernanke was saying. The Fed is ready to alter their monthly bond purchase program if the labor market continues to improve. The next Non-Farm Payroll report is June 7th. We are likely to see rates continue to drift higher leading up to the report.
“We are certainly in for a bumpy ride for the remainder of 2013,” McNee said. “Prior to May mortgage rates drifted sideways and were at fantastic levels. But that certainly hasn’t been the case since May 1st and won’t be the case for the rest of the year either.”
Another Mortgage Trader we follow described what’s happened in the past few weeks this way:
Mortgage Backed Securities have been on an evil roller-coaster–one whose intention is not to excite, but to terrify and nauseate; to alternately build up brief pockets of hope and reprieve only to more completely crush one’s sense of safety and normalcy.
What does that mean for someone who is hoping that the “Special” FHA Streamline Refinance Program will be extended to May of 2010? Well, if the extension goes through, rates are still so very low that you should still see a benefit. The Fed has a DUAL Mandate from Congress – and one of those mandates is to help the Economy and Create Jobs. Keeping mortgage interest rates very low is to everyone’s advantage right now – will rates go up some in the next 2 years? Yes. But in our opinion, we are not likely to see a full point rise in mortgage rates over a 90 day period.
Interested in buying a home in NC, or refinancing your mortgage? Want the Best Mortgage Rates? Call Steve and Eleanor Thorne 919 649 5058. We have our finger on the market, and we will help find you the very best program to save your family money!
I try and answer all questions :)