Mortgage Rates Up on Week- Why?
Quite an interesting week in mortgage rates with big earnings and inflation numbers being reported. Overall, we saw a jump in rates to an average of about 1/4 pt, and the treasury yields soared.
We had much negative economic news this week, which will normally send investors to the safety of treasuries and bring the yield and moartgage rates down. Instead, the treasury yield and home loan interest rates went up....why? Well it seems that with the treasury yields being at all-time lows, investors are looking to other higher yielding safe assests such as safe mortgage backed securities and gold. There, investors are not really stepping up risk, but getting a larger yield on their money.
On the stock market side of the equation, we saw a big up week. Investors were taking an optimistic look at reports that maybe the worst of the credit crisis is over. Another explanation might be that the market was simply oversold and bounced up off support. Never the less, the bounce in the stock market aided the rise in mortgage rates this week.
Friday opened again with a flight out of treasuries, but it seems the bonds were also oversold on a short term basis and nearly recovered to even by the day's end. Fortunately, the mortgage spread tightened a bit and we recovered some of the week's interest rate jump.
It's easy to get caught up in the short term view of rates and the markets, but the bigger picture is yet to play out. On the rosy side of things, mortgage rates are still at awesome historical levels. On the bleak end, we still don't know when the housing and credit crisis will bottom, and the extent to which it will affect the overall economy. The glass half full tells me that we are near the bottom of this crisis, but I will not predict, only react.
Refinance Tool Box
We had much negative economic news this week, which will normally send investors to the safety of treasuries and bring the yield and moartgage rates down. Instead, the treasury yield and home loan interest rates went up....why? Well it seems that with the treasury yields being at all-time lows, investors are looking to other higher yielding safe assests such as safe mortgage backed securities and gold. There, investors are not really stepping up risk, but getting a larger yield on their money.
On the stock market side of the equation, we saw a big up week. Investors were taking an optimistic look at reports that maybe the worst of the credit crisis is over. Another explanation might be that the market was simply oversold and bounced up off support. Never the less, the bounce in the stock market aided the rise in mortgage rates this week.
Friday opened again with a flight out of treasuries, but it seems the bonds were also oversold on a short term basis and nearly recovered to even by the day's end. Fortunately, the mortgage spread tightened a bit and we recovered some of the week's interest rate jump.
It's easy to get caught up in the short term view of rates and the markets, but the bigger picture is yet to play out. On the rosy side of things, mortgage rates are still at awesome historical levels. On the bleak end, we still don't know when the housing and credit crisis will bottom, and the extent to which it will affect the overall economy. The glass half full tells me that we are near the bottom of this crisis, but I will not predict, only react.
Refinance Tool Box
posted by Jim Bisnett at
7:49 AM
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