Dennis' Mortgage Blog

Investors continue to shed equities and purchase long term debt.  Despite Fed Chairman Ben Bernanke's words of optimism and President Obama's statement today that he is not worried about a double-dip in the recession, investors reacted as if they feel the economy will not be improving significantly in the near future.

The Treasury auctioned off $21 billion in 10-year notes today and the bidding was strong enough to drive the yield to its lowest level since November 2010 at 2.95%.  Foreign investors not liking their options in Europe were a strong presence at the auction. 

Money for the Treasury purchases appeared to come from the stock markets as the Dow and S&P both fell for the sixth trading day in a row.  The Dow has not had so many consecutive days of losses since last July and February 23, 2009 was the last time the S&P was on such a down streak.  With the Fed not announcing more cheap money to boost stocks and cash reserves for businesses investors are looking at more fundamental aspects of stock prices and corporate outlooks and have decided to sell, sell, sell.

Benefiting from the move from equities to bonds are mortgage rates.  Fannie Mae Mortgage Backed Securities (MBS) hit their highest closing price since the very end of November 2010.  With bonds, and mortgage backed securities, higher prices mean lower rates, or yields.  As you can see by the 30-day chart MBS prices have been moving higher for several weeks. 

When will it stop? There will be some day-to-day corrections as investors sell to take profits before re-investing, over the next several weeks however unless some startlingly positive economic news comes out the economy will keep rates low, and perhaps lower.

Mortgage rates continue to remain low for the time being.  Call or email Dennis today to determine your purchasing power for a new home loan or monthly savings from a refinance.  Direct dial 562-472-1118