Mortgage Market and Rate Recap – Week of October 13th

by Tyler Osby on October 19, 2008

Mortgage Market Recap Photo

Mortgage Rate and Market Recap for the Week of October 6th – 19th, 2008

Banks Are Over-leveraged,  Congress Steps In.

I know you haven’t forgotten the $700 billion bill that was passed.  Last week, the first move was made to inject $250 billion into some of the United States largest banks.   This was an effort to de-leverage the bank’s balance sheet.  

Read (much more) here: Business Week: Paulson’s $250 billion Bank Buy

As this announcement came through, the markets continued on with their volatile trading.  At one point, mortgage rates hit their worst level of the year (thus far).  They rebounded for the better from there, closing out slightly better than where they opened this week.

Lock or Float?

It’s a question I get all of the time.  Let me explain why.  Mortgage rates move like the stock market.  In a day, I might receive as many as 6 rate sheets.  Yep, seriously.

Until you lock your rate in at a certain point, you’re ‘floating’.  That means as mortgage rates trade on the open market and change, so does you interest rate.  If things are improving, you feel pretty good about yourself.  If things turn for the worse, you feel like you need to get sick.

I can normally provide pretty good insight into floating vs. locking.  However, with the volatility in today’s market, it’s just plain dangerous to float.  My advice anymore is lock as soon as you know the potential closing date.  Sure, locking .125% could save you thousands of dollars over the life of a loan.  The same is true if rates worsen.

Play it safe out there kids. Lock your loan.

What Did Those Reports Say?

Each week, I put up an economic calendar of news coming out that following week.   Here’s the what actually happened with those reports last week:

Economic Calendar for the Week of October 13th (with results)

What Impacts Mortgage Rates?

If you’re looking to purchase or refinance a home, it’s important to know what moves mortgage rates.  There are normally two major things that impact the direction:

  1. Economic News.  (Like the calendar above).
  2. International News. (major events, pending legislation, war related news, etc).
  3. Stock Market. (Money flows from equities (stocks) to bonds when it seeks shelter).

What Are Rates Based On?

It’s been mentioned before, but as a common reminder – mortgage rates are only based on one thing.Mortgage Backed Securities (MBS).  The only way you have access to these is through live bond quotes.

Looking For Mortgage Rates?

If you’re looking for specifically what mortgage rates are doing, I’d be happy to help with a custom rate quote.  Each scenario is different (there are 27 different factors a mortgage rate is determined by).  If you or someone you currently know are looking for a mortgage, I’m here to help!

Information without obligation.  That’s my policy.  If you like what you hear, my team would love to help!

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