RateWatch – Tough Week Slumps to a Close

Market: MBS close down 29 bps.  This erases half the gain from yesterday, which was twice the loss of the day before.  So after all this, where are we?  Exactly where we were.  Rates hanging 5% to 5.25% (your rate can and will vary).

Analysis: It’s pretty much official, this is as low as we go.  There is no buying power below 5% on the bond.  Whenever we touch 101 on the 4.5% bond, we retreat.  That means we’re not going lower from here.  At some point, the dam will break, and money will start flowing out of bonds in quantity, and at that point rates will rise, and fairly dramatically.  If you were waiting for the bottom, folks, this is it.

Take your $8000 credit, take your HomeRun2 $4000 (if you’re in Utah), and run with it.  Take what you can get and go.  Now is the time.  You’ve got 70 days to close for the Federal Tax Credit.  Waiting longer than the next week to find a house is unwise.  We’re closing loans contract-to-fund in 19 days, but that’s if everything is perfect, and counting on it is very risky.  So don’t.  Go now.

Cj

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