Colorado Home Mortgage Banking

Colorado Home Mortgage rates appear to be off to a rough start this morning.  The Mortgage Backed Securities market has lost some ground over the weekend and Colorado Home Mortgage rates are expected to be a bit higher today.  We implemented a lock recommendation last week and for those that locked your Colorado Home Mortgage rate it now appears that you made the right choice.  The market will be light this week which means the headlines will dictate the direction demanded on Colorado Home Mortgage rates.  Tomorrow we expect pending home sale figures to be reported and so far the consensus has indicated another decrease in home sales for the 2Q for 2008.  This is a drastic decreased expectation from what was reported last month.  If the report comes in better then expected Colorado Home Mortgage rates will jump up a bit.  Because there is such a huge difference in the Consensus and what was reported last I believe that the report will beat expectation.  So we will continue to hold up on our Lock recommendation.  Some Lenders may have put to much cushion on the Colorado Home Mortgage rate sheets in anticipation of a bad week.  Luckily we have access to all the lenders and we will ensure you do not get high with that Colorado Home Mortgage rate premium. 

The Pending Home Sales index measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Modeling for the new index looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years.  This is important for Colorado Home Mortgage rates because It is designed to be a leading indicator of housing activity. Greater housing sector activity indicates a stronger economy, which is generally negative for Colorado Home Mortgage markets.  We are expecting a -3% increase versus a 6.3% increase reported last time the report came out.  Because of the 10% gap from one month to the other and the fact that we are still in our selling season, I believe the report is a bit to pessimistic.  This will result in an increase of Colorado Home Mortgage rates by late afternoon tomorrow, if investors have not already priced that in today.   The only other reports to look for this week will be the trade deficit report and the consumer sentiment.  Both reports are expected to come in poorly. 

It is interesting that with the dismal outlook being portrayed in the market that Colorado Home Mortgage rates appear to be higher then they should.  I have talked about the economic conditions many times in previous blogs, but we need to remember that this is not new territory for the Colorado Home Mortgage market.  We have seen this before.  We are experiencing many pressures in the inflation category due to the oil price shock, and we are experiencing a bad economic turnaround.  Both these indicators took place in the late 1970’s and early 1980’s.  What makes this go around so much better is that our Federal Reserve members are better prepared to handle the economic stimulus needed to get us back on track.  If we did not have the current pressure from oil causing un-needed inflation fears in the market, we would probably see Colorado Home Mortgage rates in the low 5% range on the 30 year fixed.   However inflation is devaluing the bonds and investors are demanding a higher return to buy them.  This is the biggest reason we see Colorado Home Mortgage rates higher then they need to be. 

We can’t blame ourselves for the higher oil prices; it is simply demand that has caused oil to increase to its highest levels ever.  The demand for oil is not even a domestic issue it is a global issue.  We are experiencing inflationary pressures that are out of our control.  The pressure is a direct result of global demand not domestic demand.  So the only way we can combat the issues is to understand where the pressures are coming from. The U.S is no longer the market movers in the global market place.  Because we are not the market movers we need to work on understanding and forecasting based on the pressures experienced in global activities versus domestic activities.  Colorado Home Mortgage rates will probably not see the low 5% range for some time to come.  Instead we need to prepare ourselves for the up and down cycles that will result from the continued global demand.  Like the U.S. other countries like China will slow down demand as prices go up.  We need to identify the cycles demanded in the global market to understand what the pricing cycles that makes its way into the domestic bond markets.  Once that is identified, we can then begin to accurately predict Colorado Home Mortgage rate trends.  In the meantime I will continue to monitor both the domestic and global influencers that affect our bonds markets before making any real Lock/Float recommendation. 

Please contact me with your Colorado Home Mortgage questions.  I have also included a piece on foreclosures that you can read at www.coloradomortgagebanking.com/news.

Daniel

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.