Mortgage rates made a nice move lower last week. In fact, they have moved lower each of the last four weeks, to the lowest level of the year. Many of us thought mortgage rates would head higher after the Fed stopped buying mortgage-backed securities (MBS) at the end of March. Mortgage rates did move higher just prior to and just after March 31st, but new circumstances entered the market in April. Uncertainty has pushed investors out of riskier assets like stocks (the Dow is well off its recent highs) and into less risky assets like government insured MBS. Several things are contributing to this uncertainty. The European debt crisis and a tightening monetary policy in China have made investors very uncertain about future economic growth in the US. In addition, the passage by the Senate of a financial reform bill has many investors questioning how freely banks will make capital available to US businesses to finance their expansion. This uncertainty combined with very low inflation rates have made MBS an attractive alternative.
Dave Lykken hosted today’s show from the exhibit floor of the MBAs National Secondary Market and Expo. He reported that the conference was well attended and the mood was generally upbeat. Senate Bill 3217 was the topic of conversation at the conference. Attendees were pleased by the amendment to the risk retention provisions of the original bill. There was almost unanimous belief that the provisions of the bill restricting how loan officers are compensated will become law without significant revision.
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Tune in every Monday at 1:00pm(et) for up-to-the-minute information on interest rates, loan programs and “hot” industry news related to the mortgage industry. Dial: (646) 716-4972 or log in at: www.blogtalkradio.com/lykken-on-lending