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Mortgage Bonds started the week trading higher at $102.71, but lost some ground by the end of the week. As of this morning Mortgage Bonds are priced at $102.53. This led to some lenders raising interest rates on Thursday.
You would think that Mortgage Bonds would have benefitted more from the sell off in Stocks, but more money was being parked into Treasuries than Mortgage Bonds. Investors are now looking for total safety and higher returns. So investors are shying away from Mortgage Backed Securities in favor of Treasuries. Thursday mornings prices were reflective of this as the 10 Yr Note Yield was unchanged from Wednesday’s close, while Mortgage Bonds were down .12 basis points from Wednesday’s close.
Remember, Mortgage Rates rise when Mortgage Bond prices fall.
Financial Markets were looking for more direction than The Fed was willing to give in Tuesday’s Fed Statement. With no game plan in site on how to handle deflation, or longer term inflation, this was yet another reason for investors to move from Equities and into Bonds.
The Treasury and the White House will be hosting a “Conference on the Future of Housing Finance” next week. Word has it that they will discuss a bailout to help millions of homeowners upside down on their mortgage. Also to be discussed is the future of Fannie Mae and Freddie Mac.
Our position remains locking rates, even with the additional support The Fed is offering the Bond markets, the markets are fragile and interest rates can turn and move higher without notice.
Fannie Mae 4.0% Bond: 102.53 +16 BP
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