The Other Shoe Drops
Posted On: May 28th, 2009 by James Posted In: Mortgage Rates
Holy Mackeral…. Wednesday of this week was the single worst day for mortgage interest rates that I have seen since I’ve been in business. We had about a .625% spike in rates. There were many reasons behind this swing, but the main thing was oversupply in the bond market. Since the Treasury is having to bail out so many things, they have begun to make massive bond issues, in the realm of 100 billion new debt added to the market place this week. This coupled with a whiff of inflation caused a mini-sell panic in the bond market. We went into a freefall. However yesterday as the downward trend continued, we got a bounce off the 200 day moving average, and now it looks like a huge rally. So while we may be getting some of that pricing back, its unclear if we will see the 4.75% 30 year fixed rate party come back. Buckle up for massive pricing volatility in coming weeks.
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