It is Official, The Fed announced they lowered the FED funds rate by the anticipated 50bps.
What does this mean for rates? Well so far it is not good news. The Mortgage market was strongly in positive territory for most of the day, and now with just a few hours left in the day the gains are quickly eroding and the market is basically flat as I type this.
I think this may be a case of "buy the rumor sell the fact" that often happens on wall street. Since this was the expected outcome today it is pretty much a no-news scenario that the markets are shrugging off and are looking for the next number.
You can take a look at my blog from Monday with the economic calendar to see what is up next in this busy news week.
I will keep you posted with any exciting news as it pops up.
Have a great week
Rob
Quick update: Right after I posted this blog the market went negative. Obviously there is some steam behind the sell off..
Thank you Robert!
What do you mean: "the market went negative"? What exactly does that mean in conjunction with rates?
Hi Mirela,
there is an inverse relationship between price and yield in the credit markets. So when the price of a mortgage or bond goes up, the yield goes down, and the reverse is true as well. today the price of mortgages was significantly up which brings the yield down, After the report the price quickly went back to where it started the day, and then sold off further. As of now the price is lower now than it was yesterday afternoon at the close, so it is possible we will see a slight bump up in rates on the news.
I hope that clears things up?
A slight bump in the rates? Where are they at now? The rate feeder on my site puts it at 6.04%. Is that accurate and what can we expect to see as the new rate over the next few days as a result of this?
Rates are quite a bit higher than that.
Rates this morning were about 6.75% on a 30 yr fixed with 0 points for some one with good credit (720+ credit score) buying a primary residence. We probably would have dropped a bit if the market did not turn around, I anticipate we will flirt around the mid to high 6's on a 0 point loan. We keep dropping down to the low 6's and bouncing right back up in a confused market.
That was a true "0" point loan, no origination fee, no Discount points. Most of the loans I do are true '0'. Friends I have that work in SC seem to price things at 1 point, so it could be more common for buyers to pay a point in your market which would make the rate about 1/4 lower depending on the day.
Thanks for the post Robert, keep them coming, clients are all over the place wondering.
The Fed lowered the prime lending rate 33%!
Let's see a reporter use that in a headline!
Good info, thanks for keeping us up to date and well informed.
Hi Robert,
Thanks for your posts and the message you left me. It's been a busy few months, but hoping to get back in action on the rain soooooon.
Cheers,
Angela