Mortgage Rates Predictions June 05

  

  

  

  

  

  

June 5, 2008 | Rates are heading up as the battle for the 200 day moving average continues.

Mortgage Bonds were absolutely slaughtered yesterday.  The Fannie Mae Bonds opened yesterday at 99.875 and this morning we saw a low of 98.625 already.  As a reminder, Fannie Mae Mortgage Backed Securities correlate directly with Long Term Fixed Mortgage Rates.  Every -.40-.50 basis points Mortgage Bonds move is +.125% higher interest rate for consumers.  That means if yesterday morning 30 Year Fixed was 6.125% and Mortgage Bonds lost -125bp, [99.875-98.625] then this morning that same consumer would have +.25% to +.375% higher rate [6.375-6.500%].   With yesterdays notoriously misleading ADP report showing growth in employment, investors are looking for a stronger than expected employment report tomorrow.  Bonds are down -38bp at 98.81 on the day currently with no other important economic indicators scheduled for release.  Consumers should lock in their Long Term Fixed rates in this volatile market and definitely consider 5-7 Year Arms as an alterative to 30 Year Fixed since they have been improving.