Negative headlines helped out mortgage rates today.

I despise the notion of cheering for crappy news headlines.  It is what it is though....

The bond market rallied and consumer borrowing cost improved because...

  1. The People's Bank of China announced a suprise rate hike intended to cool excessive price appreciations in the Chinese housing market (inflation).  This led to a rally in U.S. dollar which led to cheaper commodities prices which weakened the U.S equity market and increased demand for risk free Treasury debt and agency MBS. 
  2. Stocks were further weakened when it was announced that Bank of America might be forced to buy back $47 billion in loans they previously sold to investors . This is what sealed the deal on the mortgage rate rally today. I went off on this issue HERE <--MUST READ

On first releases of rate sheets this morning, consumer borrowing costs were basically unchanged. However after stocks really began selling off (following the BoA news above), investors reallocated funds more aggressively into benchmark Treasuries and agency MBS. This allowed lenders to reprice for the better. At day's end, consumer closing costs had improved by about 15 basis points or 0.15% of your loan amount. If you locked today, your closing costs are on average $150 less expensive for every $100,000 of loan amount. $300 for $200,000. $450 for $300,000....etc etc.

The best par 30 year fixed mortgage rates remain in the 4.000% to 4.250% range for well-qualified consumers. 3.75% is gone, 3.875% is still very hard to find, 4.00% is available but the points/buydown structure is not homeowner friendly, and 4.125% is still where it's at for a perfect borrower.

Mortgage Rate Disclaimer:  Loan originators will only be able to offer these rates to borrowers who have perfect credit profiles and enough equity in their home to qualify for a refinance. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan a riskier investment. (investment properties and second homes are a riskier investment )

Yesterday I recapped my "Plain and Simple" perception of the challenges we face on the road ahead and how they will affect mortgage rates. I also said I would go deeper into the reasons for my insecurities surrounding record low mortgage rates. I need to push that off until tomorrow. I am pooped.

If you haven't read that post yet, please please do so: HERE IT IS

Here's a teaser:

Plain and Simple:  The main channel used to distribute wealth across America has been blocked. America's growth engines have stalled and we're starting to roll down the hill, backwards. The Fed is looking to avoid a downward spiral.

In order to avoid this downward spiral, the Fed must find a way to better distribute wealth across America. Fed leaders have made a clear case for more "Quantitative Easing" as a potential solution.

Quantitative Easing won't accomplish this goal directly though, only the ripple effects of Federal Reserve Quantitative Easing are capable of leading to sustained job creation. This is the reason mortgage rates touched new record lows in the week before last. But the Fed hasn't confirmed its plans yet and no specific timeline on when to expect Quantitative Easing has been offered. Ben hasn't communicated what policy approach the FOMC feels will be most effective either. We don't know if the Fed is totally playing us here or not. That's really why I posed the question: Are We Too Complacent with Record Low Mortgage Rates?