Saturday, February 23, 2008

Mortgage Rates Roller Coaster Ride

Bond prices and home loan rates were all over the place this past week. Some of my lenders told me that there were 1/4 point swings in one day!

Why this flurry? The Fed has been dropping their rates! That's what my buyers think. I try and give them a minor tutorial that the mortgage rates are tied to the bond market not directly connected to the Fed Rates which are more short term loans (car loans, HELOC loans, etc).

The bonds like it when inflation is in check and not increasing. Well this week we got news that showed inflation increasing and not staying in check. That has caused the roller coaster ride of rates whi week ( a quarter point swing in one day is unbelievable).

Keep your eyes on the bond market news and see how this plays itself out in the coming weeks and months. We need inflation to stay in check in order to dig ourselves out of this shifting market.

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