Mortgage Market and Rate Recap – Week of December 15th

by Tyler Osby on December 22, 2008

Mortgage Market Recap Photo

Rates Hit All Time Lows

Mortgage markets improved last week for the second week in row.  After the Federal Reserve said it would use “all available tools” to stimulate the economy, traders responded by driving mortgage rates to 50-year lows.

It didn’t last long, however.

Very Little Time

After bottoming out early-Wednesday morning, mortgage rates trended higher all the way into Friday’s closing.  It was the third time in 2008 that a sharp mortgage rate drop lasted less than one full day of trading.

What’s It Take?

Many Americans took advantage of the historically-low mortgage rates, locking in new home loans below 5 percent.  And, in general, these homeowners shared 4 characteristics:

  • Credit scores of at least 720
  • At least 20 percent equity
  • Relatively low debt versus household income
  • Ongoing relationship with a loan officer

Now, the first 3 bullet points are easy-to-understand but it’s the fourth one that really mattered — it’s the trait that got people “real-time access” to low rates the moment they published.

Honestly — I even held off on locking some loans due to rates being ‘held back’ on FHA loans.  It just didn’t make sense by the time the secondary departments came out with new rates.

When The Media Talked About It

After all, it wasn’t until Thursday morning that the press ran its stories about “4.5 percent mortgage rates” and, by that time, mortgage rates had already retreated — by as much as a full percentage point in some cases.  Thursday morning’s news was a half-day too late.

Still, mortgage rates do remain low and in my opinion will continue to move lower over time.  Just make sure you’re connected with a loan officer that can lock you in the next time they spike down.

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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