Mortgage Rates & The Fed
Just some quick observations this morning as we await news of what the Federal Reserve decides at their scheduled policy meeting today.
Many in the markets are debating whether they will cut their Overnight Rate by 0.25 or even 0.5.
In the days preceeding this event, we saw fixed mortgage rates hit new lows for 2007 and then reverse quickly, moving higher. I updated many of you and those that were quick to act were able to lock in the lowest rates in over 2 years! If you want to be on my short list of those to get real-time alerts of these moves, just send me an email at brettg (at) tidalwavecapital.com.
Well, this morning as I fired up my mortgage bond charts for the day I was shocked to see mortgage bonds rallying big time ahead of the Fed's meeting. This action is shaping up incredibly well. Depending upon how the market reacts we could see bonds springboard higher, pushing mortgage rates lower, in the days ahead.
However, if they cut by 0.5 we actually might see fixed mortgage rates move higher. If the markets see the Fed's actions allowing inflationary pressures to run unabated this hurts mortgage rates.
Going forward, we can easily see rates move lower quickly in the days ahead or it might be until next February or March at the earliest that we revisit the recent several year lows in rates.
For those that have been paying attention in recent weeks, the lesson is: when you see a great opportunity present itself you need to ACT!
Happy Holidays!
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