We've talked about the pressure being placed on interest rates due to speculation that the Fed's will be easing off of QE3 sometime in the short term, which has artificially kept mortgage rates the lowest we've seen in over 50 years.
This
morning the press seemed consumed with Ben Bernanke's retirement. That aside,
the Fed's QE3 has held interest rates artificially low for quite some time, and
there is plenty of conjecture about what will happen when it stops, and when
that will be. My guess is that the sun will come up regardless, that borrowers
will borrow and people will buy homes. But that is just a guess, given that
they were doing those things when rates were well above 15%. There are many
smart folks that think any change in Fed policy won't happen until 2014, but
the market has become increasingly skittish. Even if "tapering" is
really the same as tightening, QE and hiking rates are 2 different things.
Yesterday,
with no real news, rates went higher on the release of a questionable article
about how the Fed is close to commencing easing off its bond purchases. It was
one reporter's opinion, but nonetheless moved the markets and agency MBS prices
worsened .250 in a matter of minutes. By the close of the bond markets at 2PM
PST, current coupon prices were worse .250 and the 10-yr was at 2.17%. There is
one thing to note, and that is the June NAHB Home Builder confidence index
posted a large increase to the highest level since April 2006.
My recommendation is if you're looking to refinance or if you're in the process and haven't yet locked in a rate yet, lock in NOW! Remember the old saying "Pigs get Slaughtered".
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