Well, it’s been a chaotic day with personal schedules, so the mortgage market update is a bit later today than what I’d like. So, what’s happened since yesterday and the bond market rally that Fed Chairman Bernanke’s comments caused? Frankly, not much. Rates really haven’t moved hardly at all. What’s up with that? A couple of things:
- What Bernanke said is essentially that rates are going to stay low for quite a while. We already knew that.
- The posturing that happens in Congressional hearings really kind of mutes the overall effect of the hearings. We already knew that.
- There’s the over riding “issue” that is starting to take a bigger and bigger portion of the “stage” and that is, “When we do start to come out of this, how is the Fed going to back out of the positions that they’ve gotten in to?” More directly, what’s going to happen to the $1 Trillion worth of Treasuries and Mortgage Backed Securities that the government has bought when they want to sell them? I’m working on another post about that, and it’s ramifications for the housing and mortgage markets that I’ll hope to have up on Straight Talk – The Bigger Picture in the next few days.
- Questions about the banking world – especially the commercial real estate market are raising questions on whether this rally is “real.”
So, all of this has really led to very little change in mortgage rates. My recommendation remains to lock all loans. The downside potential for rates is significantly smaller than the upside risk due to inflation, exit strategies, economic issues and the like.