Mortgage Rate Update – February 22, 2010
Terms: (A+ paper)
Purchase money, Owner Occupied, 60 day rate lock, Full Doc. Rates Assume 1 Point
CONFORMING (up to $417,000)
30 yr Fixed 5.000% (up 1/8)
5/1 ARM 3.750% (up 1/8)
APR 30yr = 5.11%, 5yr = 4.05%
:: Market Update ::
Last week saw a lot of market activity and mostly up-ticks to mortgage rates. The 30yr Confirming finished up for the 2nd straight week. While inflation seems to be well under control, demand for U.S. debt is diminishing. Dominating the headlines was the news that China has reduced its U.S debt holdings and was a net seller of U.S. debt in December for the 2nd straight month. This likely means that the U.S. will have to pay higher rates on debt, which will ultimately lead to higher mortgage rates as well.
In related news, the Fed has been buying mortgage backed securities since early last year and is nearing the end of their purchase program. They bought an additional $11B last week and their remaining budget is approximately $55B. There is also talk from the Fed that at some point, they will start selling these MBS holdings which would likely put additional pressure on mortgage rates.
In closing, a bit of good news...The jumbo market saw improving pricing for the first time in months. Since jumbo money is not purchased by Fannie/Freddie but rather by investors, this is a clear indication that the appetite for mortgage backed securities is returning. This is also a sign that the tightening guidelines imposed by lenders is leading to quality loans that are becoming more marketable.
Dan Spitz
Private Mortgage Banker
Wells Fargo Home Mortgage
310.306.7940 Tel
dan.spitz@wellsfargo.com