What is Happening in the Mortgage Market

Mortgage Bonds are trading slightly higher today in a trend that we've seen during the recent decline in Mortgage Bond prices. Yesterday, Mortgage Bonds lost 81bp, with the recent sharp declines due mainly to the added supply hitting the markets.

Former Fed member Frederic Mishkin and PIMCO's Mohamed El-Erian were both on TV this morning confirming that the Fed is in a tough position. With home loan rates spiking considerably higher in the past few weeks, the Fed has to be concerned about how they can impact the economic recovery, but unfortunately may not be in the position to do much. As we have seen in recent weeks, the Fed's purchasing program has done little to offset the enormous amount of supply and selling coming from the Bond market.

And think about it – the cure for higher rates may be higher rates, because all of those refinance transactions being done are closing and being turned into Mortgage Backed Securities. Those securities have added greatly to the supply of Bonds being offered – so the Fed’s buying of Mortgage Bonds doesn’t have the ability to push rates lower, because the sale of new Mortgage Bonds being offered outweighs what the Fed is able to buy. We can only imagine where rates would be without the Fed buying of Mortgage Bonds, which currently is serving to at least slow down the pace of the rate increases we are seeing.

For the moment, we can Float as prices are a little higher this morning. But should things change, we will Alert you. For your customized rate quote, please call me or apply online at www.Envoy-Mtg.com

Richard Woodward

Banker / Senior Branch Manager

Because You Deserve The Best

Mortgage Pros is Now Envoy Mortgage

Office: (972) 661-5136 Fax: (972) 314-9647

17311 Dallas Parkway Suite 173 Dallas, TX 75248

Visit Us Online - www.Envoy-Mtg.com