Why did interest rates plummet last week?
In case you didn’t hear, mortgage interest plummeted last week after the feds agreed to purchase 500 billion in mortgage backed securities from Fannie Mae and Freddie Mac.
If you are not an industry wizard (and I am certainly not) let me try to break this down in layman's terms. There has always been a correlation between the bond market and the stock market. Money is always flowing into or out of the stock market. When investors pulled money out of the stock market it would flow into the bond market. As money flowed into bonds interest rates would drop. Over the past several months, we’ve lost this ying and yang system because money was placed in the cash markets instead of bonds.
This buyout just infused 500 billion into the bond market and we might have seen one of the single largest overnight drops in mortgage rates in the history of mortgage banking. NOW IS THE TIME TO BUY A HOUSE! With only 3% down, borrowers can finance a new home on a 30 year fixed rate mortgage at 5.5%!
For more information on the mortgage industry, please call:
Matt Eversgerd
Assistant Vice President
First Integrity Mortgage Services
Phone: 314-878-7900
Toll Free: 1-800-263-3959
FAX: 314-878-5636
matt@firstintegrity.com