Mortgage Market Update from Justin Bayle
March 3rd, 2009 categories: Money and Mortgages
Tomorrow is a big day! We get the details of President Obama’s HOMEOWNER AFFORDABILITY AND STABILITY PLAN!
…the “DETAILS” that are expected to be offered up will determine the perception that will establish a new trading bias in the Mortgage Backed Security (MBS) market and thus the direction of mortgage interest rates.
Getting ENOUGH DETAILS doesn’t necessarily mean lower mortgage rates though. The MBS market needs to BELIEVE that the program created by the Obama Administration will enable 4-5 million borrowers to refinance their mortgage into a lower rate. It’s all about perception at this point. If the MBS market gets spooked then money will flow into prepayment protected coupons (MBS moves down in coupon) and mortgage rates will move lower. The hope is that once rates move lower borrowers might actually start refinancing! If borrowers don’t start “pulling the trigger” the MBS market will move back “up in coupon” and we will go back to erratic rates and more “follow the leader”. And without some confidence that existing home owners can refinance into more beneficial rates and terms, it will likely be difficult for the purchase market to pick up steam as prices continue falling.
I HATE TO BUILD IT UP BUT MARCH 4 IS AN IMPORTANT DAY. LOOK FOR DETAILS FROM ME TOMORROW AS THEY ARRIVE.
In the meantime, for any other specific real estate financing scenarios, please feel free to contact me anytime.
Cheers Justin
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