Colorado Home Mortgage Loan: Price Resistance in MBS will it impact my rate?
Colorado Home Mortgage Loan rates have reached the inevitable Ceiling of resistance in the Mortgage Backed Securities market. For those who do not know what the Colorado Home Mortgage Loan price Ceiling is will need to pay special attention to what is said next. The bond market has certain price points that investors become very cautious at, and the demand curve changes when these price points are achieved. However once the price point is penetrated a new pricing Ceiling will be defined. Like a price Ceiling, bonds can also have a price Floor that will react in a similar manner. The price floor or price ceiling is determined by the direction bond prices are going.
Now that I royally confused you let me give you an example of what I mean. Let’s say the price of a bond is $100 and investors begin to buy and sell those bonds depending on the demand. All of a sudden something is reported in the economic data that favors bond prices and the $100 bond begins to rise; $101, $102, $104, $107 . . . and so on. Obviously as the bond price increases, Colorado Home Mortgage Loan rates begin to decrease. There is an Inverse relationship between bonds and Colorado Home Mortgage Loan rates. Anyways, as the price of the bond increases it tends to increase fairly quickly, but at a certain price point investors change their demand. The point where demand for bonds changes is the point where bonds hit the proverbial wall of resistance. In this example that might be $110. This is a point that the market will not generate any additional demand for bond price increases. In the event this happens Colorado Home Mortgage Loan rates will be held in its place until something different happens in the market to create more demand. In order to create more demand additional economic data will need to make its way into the market that favors Mortgage Backed Securities. If this happens then the price ceiling barrier will be broken and a new price ceiling will be established.
How does that impact your Colorado Home Mortgage Loan rates today? Well we are hovering right around that 6.25% and 6.0% range for the 30 year Colorado Home Mortgage Loan rate. If we have additional economic news reporting, that favors Colorado Home Mortgage Loan rates we might see the 30 year fixed rate move below 6.0% again. Right now we are just waiting for something to happen. Today, we did not get the push we needed to break that point of resistance. In a short week it is hard to determine what might be needed to see Colorado Home Mortgage Loan rates drop below that 6.0%. We have a very big day on Thursday which will set the tone for Colorado Home Mortgage Loan rates for the month of July. Historically the summer months have not favored Colorado Home Mortgage Loan rates, and so far history has repeated itself. We are looking for any reason for rates to improve, but it seems that anytime we have nice improvements, inflationary pressures came back in the Headlines. So we need to look at what will happen and when is the best time to react. If you are looking to lock in your Colorado Home Mortgage Loan rate in the near future then LOCKING now would be a good idea. Most lenders have priced in the improvements seen in the Colorado Home Mortgage Loan market last week. You should be able to get 6.0% today, and if it is offered you should take it. If you are looking to close your loan in the next couple of weeks then Floating until Thursday may pay off. However the risk/reward ratio does not appear to favor you. My recommendation for today is to LOCK. You will be .25% better then anything last week and about .5% better then two weeks ago.
I will be keeping a close eye on all the reports due to be released this week. If you want a brief explanation remember to visit my other site: www.coloradohomemortgageloan.net/news if you have any Colorado Home Mortgage Loan questions please let me know. I hope to service you in the near future.
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