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Mortgage Rates in Evergreen Colorado - Market Update 4-12-2010

After a scary few days after the end of the Fed's MBS purchase program, Mortgage Rates rallied late last week, to end the week vastly improved over where we closed opened on Monday.

Much of the improvement in Mortgage Rates came as a result of commentary from Federal Reserve Chairman Ben Bernanke on Wednesday as he stated inflation remains subdued and he has his concerns about the labor market.  Bottom line is that without a marked improvement in unemployment, the economy will not turn around any time soon.  Bad economy = low Mortgage Rates.

As you can see from the chart on the left, unemployment remains high, but off the highs of October 2009 when it peaked at the highest level since 1983 at 10.1%.  However, 9.7% is not too far off that mark, and it must be taken into account that unemployment figures do not include those who no longer qualify for benefits or have accepted part time work but would prefer full time work.  Also, the government has been hiring to help with the Census, which has led to some increase in jobs that will likely be temporary.

Also jostling Mortgage Rates last week were good bond auction results as investors flocked to the safe-haven of bonds in light of bad news from Europe on the Greece crisis which may be carrying over into other countries.  There is wide-spread fear that the crisis could lead to the fall of the EU which would have worldwide consequences.

So far today, Mortgage Rates are improving, but traders are watching with a leery eye for CPI inflation numbers which will be released on Wednesday.  Inflation is bad for Mortgage Rates, and it will be interesting what Wednesday's CPI numbers convey to the markets one week after Bernanke's testimony.  Also, the weekly jobless claims report on Thursday will be closely watched.

It remains a great time to lock your rate as we remain close to the lows of the past year.  However, it seems Mortgage Rates have nowhere to go but up and there was an interesting article to that effect in the New York Times today:  Interest Rates Have Nowhere to Go But Up

With the First Time Home Buyer Tax Credit deadline looming, and home prices greatly devalued in most markets, it is a great time to buy a home.  We can help you get Pre-approved within 24 hours!

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Mortgage Rates in Evergreen Colorado - Market Update April 5, 2010

Mortgage Rates got hammered last week, moving sharply higher on positive economic data and the best jobs report in quite a long time. Also weighing heavily on rates was the fact that the Fed exited their mortgage-backed security purchase program on Wednesday, meaning there will now be less demand for mortgage-backed treasuries, and also more volatility in the market without the Fed safety net in place.

The downward trend in bond prices (upward trend in Mortgage Rates) continued this morning on strong housing data, and it is difficult to tell right now where or when this trend will stop.

Take a look at the bond chart to the left.  The green lines are "support" lines and the red lines are "resistance."  This means that it will be difficult for bond prices to "pierce" through one way or the other.  However, we saw bonds pierce through support repeatedly last week, and now prices sit well below the 200-day moving average (pink line), an important trend line. 

With prices so over-sold, a correction could be in store, but who knows how much of a correction.  There is a large amount of supply hitting the trading floors this week, and without the Fed to keep the new supply in check, we could see further price-erosion.  Fed policy statement is due out this week, and the verbiage in the statement will be interesting and closely watched, a potential market-mover.  This week will likely see a lot of volatility in Mortgage Rates as the markets try to get used to things without the Fed present as a buyer.

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