Daily Mortgage Rates – ARM Mortgage Rates Dropping?
Posted on | August 31, 2009 | 1 Comment
Daily mortgage rates have been quite stagnant over the last few weeks. ARM rates have fluctuated very little over the last few weeks as they are following the lead of the 30 and 15 year fixed mortgage rates. It seems that the great volatility at the beginning of August has slowed to a halt as the month comes to an end. It will be very interesting to see how the month of September plays out as the Fed is trying to slow their purchases of US Treasuries.
ARM rates were very volatile for much of August with the 5/1 ARM going from 4.05% all the way up to 4.35% before coming all the way back down to around 4%. We are now sitting at levels around 4.15% but have been relatively stable for the last week and a half. Is will be interesting to see how all of this plays out when the Federal Reserve Bank takes their hand out of the pot and stops buying US Treasuries.
The purchasing of treasuries by the Fed is the main reason that we are seeing interest rates at such a low level. The overnight Fed Funds Rate remains near zero and each time we see a tick up in mortgage rates, the Fed dumps a ton of newly printed money into US debt. When this stops in the months to come, it will be likely that mortgage rates start to tick up. When mortgage rates start to tick up, look for President Obama and his stay to adjust their strategy.
No one really knows if we are going to see foreign investors come in and buy up US debt but we all have to hope this is the case. If this does not happen, we are likely to see a very strong move up in treasury yields to lure these foreign investors. When the treasury yields start to move up, you can bet that mortgage rates will follow suit and move up to the next psychological level. That level will be about 6% for the 30 year fixed mortgage rate.
Overall, daily mortgage rates remain at historical lows and this is a great time to get a first mortgage or refinance your current mortgage. No one knows what mortgage rates will do when the Fed stops buying Treasuries but it is sure to be an interesting ride. If you have been on the fence about getting a first mortgage or refinancing now might be as good of a time as any to start this process.
Author: Heather Best
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September 2nd, 2009 @ 7:51 am
I just locked in a 5/1 ARM at 3.875 with no points at Suntrust.