Danny Salas

Archive for December 22nd, 2009

Chico, CA Interest Rates Market Report – Economic Influences – December 22, 2009

Only $163 Billion Left in the MBS Purchase Program

What In The World Happened To Interest Rates?

Well, I’ve been talking about this for quite some time…preparing everyone for the inevitable plunge in bond values and increase in interest rates.  And while I’ve also mentioned the it’s going to be a bumpy road causing rates to bounce up and down, we’ve lost over 150 basis points since Friday, alone.  That’s a 1.5% Point cost on a real estate loan, people!  $1,500 per $100,000 borrowed.  That’s significant!

Short Week

With Christmas right around the corner, stocks have been reacting quite excitedly.  This has taken the sails out of Mortgage-Backed Securities (MBS) and Bonds, causing rates to increase this week.  We had another “Quadruple Witching Effect” this last week, with Nike, Oracle, and some other Stocks taking off and moving investors away from Bonds.

$163 Billion Left

There is only $163 Billion left in the Government Purchase Program for Mortgage-Backed Securities.  With the program ending in March, and with another short week, next week, when the Government will auction off 2-Year, 5-year, and 7-Year Treasuries, expect interest to be slight, and therefore cause rates to jump, potentially, even higher.

Locking Advice

We’re now sitting on the lowest levels seen in MBS values throughout the year.  Since September 23, we haven’t seen rates this high…and with a short week this week, a short week next week, and The Government Purchase Program, that helps keep rates low, running out of funds, it just might be time to start taking your opportunities to lock…seriously.

Related Must Reads

Quadruple Witching…What It Is, and When It Occurs

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