Last week proved to be another extremely volatile one for mortgage backed securities. Retail sales data came in lower than expected, and the Consumer Price Index held steady. Unfortunately, this data failed to move mortgage rates downward as usually expected. The culprit continues to be lack of investor interest, and the situation is unlikely to improve anytime in the immediate future. Thursday news of The Carlyle Group, which manages a portfolio of mortgage-backed securities, not being able to meet a margin call and being forced to sell large amounts of high quality mortgage paper into the markets at great financial losses was followed by news Friday of the collapse of investment bank, Bears Stearns, which is being rescued by an unusual move by the New York Fed and JP Morgan Chase.
This week is loaded full with market moving reports, expect another roller-coaster ride for mortgage rates. We'll get the latest readings on the health of the manufacturing and housing sectors, but the main event will take place on Tuesday when the Federal Reserve announces its latest interest rate decision and Policy Statement. The Fed meets is expected to slash interest rates by another '/2 point. With last week's unchanged CPI, some analysts are calling for a 3/4-point cut. The Fed's Policy Statement will also be scrutinized. Remember when the Fed cuts short term rates typically long term mortgage rates go up. Advice is to minimize the risk of volatile in the market and lock.
Paul Cantor is a mortgage planner at TrustMor Mortgage in Richmond, Virginia. He may be reached at (804) 433-1510 or on the web at www.PaulCantor.com .
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment