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Yesterday we saw mortgage rates loose a little of the gain they made the previous day.  We should see mortgage rates trading over the next few weeks in a range of 4.5%-5%.  I will mention ranges because the volatility is hard to keep a handle on.  We are seeing .25% swings a few times a day.

On that note-I will write a short speech:  Finding the lowest rate in the mortgage market is like finding a needle in a haystack.  On any given day- rates will vary from lender to lender based on when the rates have come out for the day, lenders capacity and the level of tolerance for the volatility in the market.  I try to to the best to pin point the better rates in the trading range but this is not a normal market.  We are seeing an interesting phenomenon take place with investors because we have come under high volume- it becomes a supply and demand issue.  Investors are holding rates a little higher because they can't handle the volume coming through the door.

The average 30 year fixed mortgage rate last week was 5.021% -taken from the FreddieMac site which tabulates mortgage closings across the country.  We all have short memories but less than 60 days ago we were at 6.25%.  A 30,000 foot helicopter view would indicate anything less than 5% on a 30 year mortgage is the best in the last 37 years...

rates are up and stock market is down.  Interest rates on 30 year fixed mortgages are in the 4.875% -5.125% range.  These numbers depend on cash out transactions/ credit score /loan to value etc.15 years are trading between 4.5%-4.75%. 

Investors have renewed fears about Bank of Scotland, Citibank and Bank of America.  The traders were really waiting to hear something from Obama via the inauguration speech about fixing the economy but they heard nothing new and sold out.  I think the mortgage rates could come back a little but a couple things need to happen.  The government needs to keep buying the mortgage backed securities because without demand.. rates will stay higher.  Also the banks need to become stable.. eventually mortgage backs are bought by various banks and as long as they are deeply in the red.. the only real buyer for mortgages is the government.

Rates are still extremely good.  Again- we are still seeing at some of the best rates we have seen.  If it makes sense to refy- or you have an arm that will adjust- review the options and make a move.  The market moves very quickly.  I would rather be disappointed if rates go down.. versus mad and---x!*! if they go up and i missed it.

Thanks for reading

So my daughter Mckenzie turns 4 today.. specifically 2 1/2 hours ago she turned 4.  Lots of people talk about the terrible 2's... I would say the terrible almost 4's!  She is a great child but very strong willed and has a reason or excuse for everything.   She might have a career in politics with these skills-she watched some inauguration stuff with me last night and really just likes to say "Barack Obama." I just started her in tennis lessons.  My hope is that she will be really good and turn professional... I am trying to find alternatives to funding my retirement- the stock market does not seem to be the answer.  I am just kidding about the pro tennis.. but i am not kidding about the doctors kit i got her for her birthday...

Thanks for reading and have a great day.

There was a barrage of bad news this week and with the government buying mortgage backed securities- the interest rates could not push lower.  Rates are hovering between 4.75-5.125% for most clients with 1%-.5% origination and 0 discount points on a 30 year fixed mortgage.  I am wondering where all those people are that said wait for 4% rates?  I am not sure if we will see them. The news stream is not good but we just are not breaking out and seeing rates go really low.  Maybe investors are saying this is enough.. long term 30 year money at this rate is historical.  JP Morgan Chase did beat their earnings expectations yesterday.  Maybe that 1 good think outweighed the 5 other bad things.  

Don't wait on refinancing if it makes sense for you move forward.  There is a lot of volatility out there- and nothing that is happening in the market is normal-it is emotional and confidence driven.

Stock market down 248 points, Retail sales horrible, and interest rates move a little for the worse.

Tomorrow has lots of economic news that should move the market.  I think it will be pretty grim- so should help us recover what we lost today at least.

Bright note... Mr. Stern of the Minneapolis Fed says the light is at the end of the tunnel.  I hope so because the tunnel still looks pretty dim- but smarter folks than me are seeing a bottoming process.  Lets hope...

Rates traded fairly flat today.. with small swings of a 35 basis points.  The Fed also bought 3.5 billion of mortgage back securities today.  This is an interesting point because 1 week ago when they bought- the market moved almost .5% for the better.  Today- this seems to be necessary just to keep things even.  Does this mean that the hopes of the 4.25% rates that people have been talking about will not come?  I am not sure- but 3.5 billion is a lot of mortgage backed securities and if this is not moving the market... hmm.

rates available for a 30 are in the 4.625-4.875% range depending on loan amount- cash out-credit score-origination points the list goes on. 15 years are pricing at the 4.375-4.625% range and 20 years are the same as 30 years right now.  Jumbo arms can be had for the mid 5's but stellar credit score and loan to values of 75% or below. Sometimes in this market it is not a matter of the lowest rate- but who can simply get the loan completed.  Each interest rate quote is custom. 

The bond market opened in positive territory because the Federal Goverment has started to purchase mortgage backed securities.  With the Fed providing this underlying support-we will likely see the best rates in the first 2 quarters of 2009.  There will be lots of volatility because with each trade there is a buyer and a seller..and some bond holders may take the opportunity to offload some of the bonds for quick cash.

Worst Predictions About 2008

Just about everybody got wrong-footed by 2008, but some forecasts were spectacularly off the mark. In no particular order, here are 10 of the worst predictions.

By Peter Coy

1. "A very powerful and durable rally is in the works. But it may need another couple of days to lift off. Hold the fort and keep the faith!" — Richard Band, editor, Profitable Investing Letter, Mar. 27, 2008

At the time of the prediction, the Dow Jones industrial average was at 12,300. By late December it was at 8500.

2. AIG (AIG) "could have huge gains in the second quarter." — Bijan Moazami, analyst, Friedman, Billings, Ramsey (FBR), May 9, 2008

AIG wound up losing $5 billion in that quarter and $25 billion in the next. It was taken over in September by the U.S. government, which will spend or lend $150 billion to keep it afloat.

3. "Freddie Mac (FRE) and Fannie Mae (FNM) are fundamentally sound.... I think they are in good shape going forward." — Barney Frank (D-Mass.), House Financial Services Committee Chairman, July 14, 2008

Two months later, the government forced the mortgage giants into conservatorships.

4. "I'm not an economist, but I do believe that we're growing." — President George W. Bush, July 15, 2008

Nope. GDP shrank at a 0.5% annual rate in the July-September quarter. On Dec. 1, the National Bureau of Economic Research declared that a recession had begun in December 2007.

5. "I think Bob Steel's the one guy I trust to turn this bank around, which is why I've told you on weakness to buy Wachovia (WB)." — Jim Cramer, CNBC commentator, Sept. 15, 2008

Two weeks later, Wachovia nearly failed as depositors fled. CEO Steel eventually agreed to a takeover by Wells Fargo (WFC). Wachovia shares lost half their value from Sept. 15 to Dec. 29.

6. "Existing-Home Sales to Trend Up in 2008" — Headline of a National Association of Realtors press release, Dec. 9, 2007

On Dec. 23, 2008, the group said November sales were down 11% from a year earlier in the worst housing slump since the Great Depression.

7. "I think you'll see $150 a barrel [of oil] by the end of the year." — T. Boone Pickens, June 20, 2008

Oil was then around $135 a barrel. By late December it was around $40.

8. "I expect there will be some failures.... I don't anticipate any serious problems of that sort among the large internationally active banks." — Ben Bernanke, Federal Reserve Chairman, Feb. 28, 2008

In September, Washington Mutual (WAMUQ) became the largest financial institution in U.S. history to fail. Citigroup (C) needed an even bigger rescue in November.

9. "In today's regulatory environment, it's virtually impossible to violate rules." — Bernard Madoff, money manager, Oct. 20, 2007

On Dec. 11, Madoff was arrested for allegedly running a Ponzi scheme that may have cost investors $50 billion.

10. "There's growing evidence that parts of the debt markets...are coming back to life." — Peter Coy and Mara Der Hovanesian, BusinessWeek, Oct. 1, 2007

Oops.

Coy is BusinessWeek's Economics editor.