Colorado home loan rates suffer greatly as investors rush out of the MBS market
Colorado home loan rates took a big hit over the last couple of days. We have had a variety of economic reports coming out and so far it is hard to determine the exact reason Colorado home loan rates jumped the way they did. The biggest market mover yesterday came with Retail Sales. Colorado home loan rates jumped after better then expected retail sales sent signals that we may actually be in a recovery period. Recovery periods tend to send investors shopping for higher risk investments, which typically yield better returns then Mortgage Backed Securities. We saw Colorado Home Loan rates get worse by about .375% depending on the bank. Regardless of which bank you shop at, Colorado Home Loan rates did get worse by at least .25%. Mortgage backed securities went into a selling frenzy yesterday, and one investor after another jumped on the band wagon. The 5.5% coupon dropped down to 99-30 which put Colorado Home Loan rates at its highest level in 3 months.
The economic data alone did not make Colorado Home Loan rates to increase the way they did. The Federal Reserve board members spoke out yesterday and reiterated concerns for inflation. The Federal Reserves current policy is to fighting inflation at all costs, which tends to be good for MBS, but the fact that inflation is a concern in the short run is bad for Colorado Home Loan rates. Inflation is bad news for Mortgage Backed Securities and the mention of it drives investors out of long term bonds and into short term investments. The primary reason for that is simple long term bonds devalue as inflation increases reducing the return on the bond. Colorado Home Loan rates always react negatively to this information. The Federal Reserve representatives appear to be much more outspoken under its direction today then in the past. The current communication policy is drastically different from the communication policy’s of past Federal Reserve administrations. This is a new thing for investors to get their hands around. During Greenspan’s administration with the Federal Reserve the policy was to maintain strict confidentiality and only report the data necessary to keep the market moving in the right direction. Today it appears that the policy is to get more information out and let the financial markets dictate how it will react to the data. This is a good thing, but investors are still uncertain how to react to the information. In the past they have reacted heavily on anything that was said, because the data was limited and we are still seeing this sensitivity with investors in the market today.
Colorado Home Loan rates did recover slightly today, but not enough to make a major impact from the losses felt over the last couple of days. Luckily most of our loans in the pipeline are locked. I like to think that I had something to do with that, but honestly we did have some luck involved. However, if it makes me look like a rock star for the moment at least, then I will take that for as long as I can. Colorado Home Loan rates jumped up about .5% over the last week, which will impact anyone trying to lock today. Try not to let yourself be too distracted by the rate increases because, I believe we will have some better days ahead. Consumer Pricing Index was released a few hours ago, and it signaled that inflation, at least for the moment, is not as bad as first anticipated. The numbers came in lower then expected which is good news for Mortgage Backed Securities. The Mortgage Backed Securities market reacted well to the news and Colorado Home Loan rates did rebound a bit today. We have a variety of Economic reports being released tomorrow and you can learn about these reports at www.coloradohomemortgageloan.net/news
If you have not locked yet, then you are better FLOATING your rate for the time being. The market over reacted in the last 3 days and it appears to be slightly undervalued. With that said if the economic data being released tomorrow (Jobless claims, and Industrial Production) shows data that is Bond adverse then, much of the devaluation will be made up, and rates will certainly head in the wrong direction. O.K that should cover me if the market continues to head in the wrong direction but here is what I believe. If you have not locked yet the risk reward is good to wait until after the reports come out. The Mortgage Backed Securities Market closed on a heavy upward swing which translates to lower Colorado Home Loan rates. We are hoping that this momentum will continue this evening in the foreign markets and carry over into tomorrow. If that happens and the economic data is bond friendly then rates will probably make up a bit portion of what was lost over the last week or so. The LOCK rate recommendation continues to stand at 5.75% and I believe we will get there again, but we need some help from the headlines to push investors back into the market. We have seen a great deal of up and down momentums over the last 6 months and for the moment it does not look as if the trend will stop. Colorado Home Loan rates should hit a point where locking will make sense, but right now the market just does not seem to be valued correctly to make that recommendation today. I will continue to update you on where Colorado Home Loan rates are, but in the mean time have a great day. I apologize for missing a couple days, but when the market goes crazy my time is better served on the phones with you. If you need up to minute date info on Current Colorado Home Loan rate information call me it only takes me a minute or two to bring you up to speed, but an hour or so to write the information down. Best of luck and stay tuned.
Daniel
Tags: Colorado home, Colorado home loan, home loan, Loan Rates
