Interest Rate Outlook - Last update on February 20, 2008
I think that we may have some short term rate declines in the 30 year fixed product, but that over the long term it
will be under continued pressure to go up. Inflation is a key ingredient for the future of interest rates. The report
of CPI numbers in the 4.2% range on February 20 has added fuel to the fire. Historically, as inflation has reared
its ugly head, rates have gone up. Another factor is the valuation of the dollar, specifically for foreign investors.
The weak dollar means a smaller return on US investments including treasuries. Investments in US treasuries
and mortgage securities will decline as investors look elsewhere for higher returns. Such a scenario will drive up
yields on all long term bonds, including mortgage backed securities.
Now, if the stock market shows significant weakness and volatility in the coming weeks, the rate on the 30 year
mortgage will improve as investors seek safety in bonds. Again, this will be a short term phenomenon so lock a
good rate while you can.
Another factor impacting rates are concerns about the stability of mortgage backed securities (MBS's). Treasury
yields have been dropping like a rock, but the same isn't true when it comes to MBS's. Investors are fearful that
future investments in MBS's will come back to haunt them. The spike in foreclosures and the subsequent huge
write-offs on wall street is one reason for this. Hopefully, investment firms will start buying MBS's once again
such that rates improve even further.
Wholesale Interest Rates
as of 06/26/2008:
*Conforming:
30 year fixed - 6.125%
15 year fixed - 5.625%
7 year ARM - 5.875%
5 year ARM - 5.625%
3 year ARM - 5.375%
*Priced at par and available for borrowers who have a credit score of 720 or higher
**Jumbo (Agency-up to $729,950):
3 year ARM - 6.0%
5 year ARM - 6.125%
7 year ARM - 6.375%
30 year fixed - 6.25%
**Priced at par, 75% LTV using full doc guidelines for borrowers who have a credit score
of 720 or higher"
Rates for an investment property generally runs about 1/4% higher.
Rates can change quickly due market volatility.
Back to Loan Services
I think that we may have some short term rate declines in the 30 year fixed product, but that over the long term it
will be under continued pressure to go up. Inflation is a key ingredient for the future of interest rates. The report
of CPI numbers in the 4.2% range on February 20 has added fuel to the fire. Historically, as inflation has reared
its ugly head, rates have gone up. Another factor is the valuation of the dollar, specifically for foreign investors.
The weak dollar means a smaller return on US investments including treasuries. Investments in US treasuries
and mortgage securities will decline as investors look elsewhere for higher returns. Such a scenario will drive up
yields on all long term bonds, including mortgage backed securities.
Now, if the stock market shows significant weakness and volatility in the coming weeks, the rate on the 30 year
mortgage will improve as investors seek safety in bonds. Again, this will be a short term phenomenon so lock a
good rate while you can.
Another factor impacting rates are concerns about the stability of mortgage backed securities (MBS's). Treasury
yields have been dropping like a rock, but the same isn't true when it comes to MBS's. Investors are fearful that
future investments in MBS's will come back to haunt them. The spike in foreclosures and the subsequent huge
write-offs on wall street is one reason for this. Hopefully, investment firms will start buying MBS's once again
such that rates improve even further.
Wholesale Interest Rates
as of 06/26/2008:
*Conforming:
30 year fixed - 6.125%
15 year fixed - 5.625%
7 year ARM - 5.875%
5 year ARM - 5.625%
3 year ARM - 5.375%
*Priced at par and available for borrowers who have a credit score of 720 or higher
**Jumbo (Agency-up to $729,950):
3 year ARM - 6.0%
5 year ARM - 6.125%
7 year ARM - 6.375%
30 year fixed - 6.25%
**Priced at par, 75% LTV using full doc guidelines for borrowers who have a credit score
of 720 or higher"
Rates for an investment property generally runs about 1/4% higher.
Rates can change quickly due market volatility.
Back to Loan Services
Click on a Link below
to find out about:
to find out about:
5 Bedrooms, 2 plus baths
1810 square feet
1810 square feet
$735,000 w/ Roof Credit
11574 Estrella Court
Dublin, CA
11574 Estrella Court
Dublin, CA
Joseph Mendes, MBA
Realtor and Mortgage Broker
Your Realtor and More
510-281-0501
Realtor and Mortgage Broker
Your Realtor and More
510-281-0501
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