How Long Will Interest Rates Stay Low? 
"A very long time," according to Bryan McNee, vice president and senior bond analyst for MBSAuthority.com. "The market still widely believes that the Federal Reserve will be unable to begin tapering their massive bond purchases until at least June 2104," McNee told MBA. "That's quite interesting, becaue keep in mind we have our latest budget ceiling in February where (Congress) is going to have to renegotiate again, and the Fed will have to react to that."

I find McNee's comments refreshing. I'm glad that someone has decided to comment on the possibility that the will have to continue their purchase program for an extended period of time. Maybe now we can stop all of the hand-wringing over Tapering and we can all get back to buying homes and providing mortgages.

Stay tuned for more of McNee later in the week. I think I like this guy.

[ 2 comments ] ( 232 views )   |  permalink  |   ( 3 / 1892 )
Rates End Week Unchanged 
There was some upward pressure on interest rates this week, which is typically not good news. The good news is that the Conventional 30 year fixed rate remained at 4.125% at weeks end. This rate would be available for a borrower who has excellent credit (credit score of 740 or greater) and could be obtained with little or no points if you make the right size of down payment.

The Conventional 15 year fixed rate remained at 3.25%, assuming the same parameters as mentioned above.

Market conditions became somewhat volatile since last Friday, but I thnik we may see the market become calmer next week. Unless you are going to closing and you have to lock, I feel that it is still relatively safe to float your rate. There may still be some volatility so don't put your blinders on and ignore the market, but overall the risk could be outwieghed by the reward.

[ 4 comments ] ( 765 views )   |  permalink  |   ( 3 / 2049 )
FOMC Minutes Drag Down Mortgage Market 
The FOMC minutes were releaed this afternoon and mortgage bonds sagged based on the content. The Fed's comments weren't overly exuberant about the economy, but apparently they weren't dire enough. It seems to me that we are splitting hairs here, but mortgage market particpants live in the future,not the past. So, looking forward, the quicker the economy improves and the employment numbers grow, the sooner the Fed will begin Tapering. The pundits took from the wording of the minutes that the Fed isn't quite as disappointed with the data as they wanted them to be.

Remember, tomorrow is another day, and the credit markets do not move in a straight line in either direction. I certainly don't think this is the beginning of the end of low interest rates.

[ 2 comments ] ( 129 views )   |  permalink  |   ( 3.1 / 1419 )
October FOMC Meeting May Move Markets Tomorrow 
The Federal Open Market Committee (FOMC) ends their October meeting tomorrow and the minutes could move the mortgage market. Concensus is that they will not change their current monetary policy and they will continue purchasing Treasuries and agency eligible Mortgage Backed Securities (MBS) at the current pace of $85 Billion per month. What if concensus is wrong?

Well, if they start Tapering, mortgage rates will immediately move higher and stocks will probably move lower. As i have said before, I just don't see any indicaton that this will occur. The jobs figures are underperforming and the economy isn't that strong, but I've been wrong before. Stay tuned.

[ 3 comments ] ( 4139 views )   |  permalink  |   ( 3 / 1269 )
Goldman Sachs - Tapering will Most Likely Start March 2014 
On October 22nd, economists at Goldman Sachs said, "Although December remains a possibility, this report (jobs) makes it more likely that the Fed pushes the first reduction in the pace of its asset purchases into 2014. While the uncertainity is considerable, we think March is the most likely date under our economic forecast, and the assuumption that the next set of fiscal deadlines proves less disruptive than the most recent set." Well, I cettainly don't have the knowledge, data, or expertise that they have at Goldman, but I find it difficult to believe that the FOMC will Taper that quickly. Here's why.

The Jobs Report is all over the map. There isn't any consistency, and the accuracy is always questioned. For example, August was revised up from 169,000 to 193,000 (this almost keeps pace with jobs lost), while July was revised down from 104,000 to 89,000 (This certainly doesn't keep pace, and September was only 148,000 (again not enough to keep pace). Some experts were even surprised (really?) by the low growth in the private sector for September, and there seems to be a weakening trend the past several months. Remember, the FOMC has pledged to keep the purchase progam in place until the Unemployment Rate drops to 6.5%.

Last Monday I wrote that I don't see the economy creating many new jobs in my community, and these figures seem to bear that out. If we are losing more jobs than we are creating, how can the Unemployment Rate be decreasing? Just a little food for thought.

[ 2 comments ] ( 44 views )   |  permalink  |   ( 3 / 2111 )

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