Ding, Ding, Ding………………round 2 says the Fed. Yes this is round 2 by the Fed to print real cheap money (almost free) $600 Billion worth to buy our debt in the form of U.S. Treasury Bonds. How does that work into the mortgage market and interest rates? How the FED lowers mortgage rates is by printing more money, this typically causes the interest rates to go down. Also when there is a lot of people buy U.S. Treasury Bonds then simple economic supply and demand takes hold which keeps the mortgage rates down. The reason for this is the 30 year fixed mortgage rates are usually hedged by the 10 year treasury notes. This is mainly because, on average, a mortgage will only last 7 years until it changes again, either by refinance or person selling their house and getting another one.
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When markets are on very shaky ground, everyone hangs on the way sentences and wording come out of Fed Chairman Ben Bernanke’s mouth. So of coarse since he is talking later on this Friday, all eyes are on his mouth, well at least the words coming out of it. Here is what CNBC has to say about what might take place, hope you enjoy 
http://www.cnbc.com/id/38872170
Bernanke Speech to Set Market Course Friday and Beyond
Published: Thursday, 26 Aug 2010 | 9:30 PM ET
By: Patti Domm
CNBC Executive Editor
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After the Fed’s two day meeting it is expected that they will continue with the language for keeping the rates low for “an extended period”. This is the over night rate that the banks get charged for using money and that are at near zero rates. What does this mean for mortgage rates? Well, there are many different factors that make up the movement of the mortgage rates just like the treasury note auction and any other items like employment and general markets. The Fed will give their announcement at 1:15pm CST. Below is an article that talks a little bit more about Fed’s meeting and the market. Hope this helps
Fed Set to Renew Promise of Continued Low Rates
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Here we go again, with the 10 year treasury note auction coming up May 5th is the announcement and May 12th is the auction date and it will be interesting to see where the mortgage rates go. So far the 10 year treasury notes have found demand but how long will this last for………who knows. You also have another factor which is the government now has a bunch of mortgage backed securities and will want to start selling them off soon. It will be interesting to see how the pricing goes for mortgage backed securities and what it will cause the mortgage rates to do. Now for the answer to the always asked question, “What are the rates going to be?” or “When are the rates going up?” ……….the answer………… don’t know. The reason for not know is because we just don’t know how everyone’s demand is going to be for the items that tie into the mortgage rates. Best way to look at it, rates are truly at an ALL TIME LOW and you will never be able to get the EXACT lowest mortgage rate, so instead of trying to shoot for the lowest, just lock in and pay an extra $50 to $100 a month towards principal and it will all work out. Since my previous post about the treasury note auctions had the dates for the auctions, thought I would give the link for the schedule again……….here is the treasury note auction schedule. Hope this helps Love to hear your comments and what you think as well.
Looks like rising mortgage interest rates might be delayed as I stated before. Treasury auction today shows demand is still there for 10 Year Notes which are one of the key plays tied into what mortgage rates look. Found this good article below and wanted to share with you guys. The key now is to watch the Treasury note schedule of when the auctions are for the 10 year notes and see how demand will be for the notes. If the auctions do not find demand then rates will rise, just not sure how high. Right now the mortgage interest rates are mainly speculation on the demand and this will cause a roller coaster ride. Hope you find this helpful
Treasury Auction Finds Strong Demand For 10-Year Notes
Published: Wednesday, 7 Apr 2010 | 1:10 PM ET
By: Jeff Cox
CNBC.com http://www.cnbc.com/id/36220519
Investors showed surprisingly strong appetite for long-dated Treasurys in a Wednesday auction that saw high demand and lower-than-expected yield.
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What you need to watch for to see if mortgage rates will rise is the 10 year Treasury Note sale date after the end of March. The FED is ending their stimulus program for buying mortgage backed securities and debt which comes in one form as Treasury Notes. The mortgage rate market will be pretty bumpy up until the 1st auction is held without one major buyer which is the FED and that date is April 7th according to the Treasury Note auction schedule. Some of this is explained in this old prediction post mortgage rates will rise by end of 1st quarter 2010. I decided to put out a couple of key dates you should be watching for, but in the mean time get ready to hold on to the interest rate roller coaster for the next month or so.
March 31st — Ends the FED stimulus of being a 1.25 Trillion dollar buyer in the market of our debt.
April 6th — this is the auction date for 3 year Treasury Notes. (are not tied into mortgage rates as much but a good indication of the demand for buying Treasury Notes.
April 7th — 10 Year Treasury Note Auction, the bid day of determining what the demand will be for this debt and one of the key elements tied into mortgage rates. This is also the first auction after the FED pulled out of being a 1.25 Trillion dollar buyer in this market.
Be interested in hearing what you think about this. Hope this helps
Just like in an earlier post Mortgage Rates Will Rise, looks like demand is slowing down at least at the 5-year auction. The big one will be watching for the 10-year Treasury auction since they are the ones that are tied into mortgage rates. It will be very interesting over the next few weeks to see how the market will react about mortgage rates. Some are saying mortgage rates will stay the same and the market has already set the price. Others are saying that mortgage rates will be jumping up by maybe one whole percentage point. Only time will tell which way the mortgage rates will go, and we will not know for sure until we are fullying into April and after the 10-year Treasury note aution takes place then. Here is an article from CNBC, Hope this helps
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In politics, financial markets, and real estate the only true constant is change. Ever since November I have been warning about the FED’s stimulus program ending March 31st of 2010 and that would be a factor in making rates jump up a little bit. Sounds like that might change depending on how the politicians roll the dice on this and how our economy is looking. The article below touches on this just a little bit, but only time will truely tell what will happen in the future. Hope you enjoy this and as always, have a glorious day!
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Hmmmm…..seems like I have been telling of this warning at my earlier blog post Predictions for 2010 <<<Click that link<<<, now others are saying the same thing. Don’t know how high they will go, but not really seeing rates staying at these levels too much longer.
Check out this article I found and let me know what you think.
Full article visit: http://www.cnbc.com/id/34513588
After Record Lows, Mortgage Rates Headed Up in 2010
Published: Tuesday, 22 Dec 2009 | 3:07 PM ET
Mortgage rates have inched upward in the last weeks of 2009, and that trend will continue through 2010. The question is how high they will go.
“If you told me by the end of 2010 a 30-year rate was at 6 percent, that sounds about right,” says Mark Zandi, chief economist at Moody’s. “I don’t think there’s any question rates are headed up.”
Rates are still historically low heading into the new year. The average fixed rate on a 30-year mortgage was 4.94 percent the third week of December. But that’s higher from the record low of 4.71 percent the week of Dec. 3.
So far, it’s turned out to be a case of nowhere to go but up, says Lawrence Yun, Chief economist at National Association of Realtors.
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Winter is usually a slow time during the homebuying season because of everything taking place near the end of the year. This year is different since you have a stimulus package for buying a home that ends in April, and mortgage rates that more then likely will go up near the end of March. Yes, mortgage applications should be up as people need to realize the time to act is now with all the government help. Hopefully people are listening Always good to speak with a professional and make sure to stay away from a lot of scam artiest. If it sounds too good to be true, walk away and take some time to think about it before acting. Below is a article found on Reuters. Hope you enjoy
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