March 2010 Mortgage Rate Update

Posted On: March 28, 2010 By: admin

One of the biggest factors effecting the rate markets today is the increasing issuance of corporate debt as the economic outlook improves, the Demand for corporates is increasing and the yields are better than treasuries. The treasury markets have always been considered rock solid safe investments that kept many investors out of the corporate bond market. Today US debt is increasing so rapidly with a Congress and Administration hell bent on more spending, that investors see the gap in safety narrowing.

The bond and mortgage markets will be skittish ahead of the 7 yr auction and with yields at the highs of the year. Trading will be choppy with wide swings now for the next week or so as the pounding today is analyzed in context of the economy, demand for US debt and of course, the equity market that is characterized these days as completely ignoring current economic data in favor of the wider outlook that ion itself is on shaky ground in our judgment.

Regarding market moves like this week’s the speculation from the talking heads runs rampant. The first thing we heard was that the spike is in response to the health care bill. No matter what you are told about the bill cutting the deficit by $130B, it is totally and completely a smoke screen. There isn’t any savvy trader in the markets that believes that; the US deficit is set to increase much more than it would have without that bill. Yes Virginia, it will appear to be a cut but when we look out a few years the reality sets in. No matter how the pie is sliced the bill cannot be funded with tax increases as the plan is constructed, to insure 30 mil more people will cost the taxpayer with higher taxes and more deficit spending. Possibly those sovereign countries funding US deficits are getting a little concerned and in the future demand higher interest rates. Whether the reaction to the health care bill actually caused the rate spike isn’t clear; what is clear though is that Treasury borrowing $192B a month on 2s through 30s isn’t likely to fly much longer with low interest rates.
-Shirmeyer Rate Market Report / Sigma Research, Inc.

Though the dollar has benefited by recent spikes in the market, we would caution that rates will increase over the next 30 days as 2010 continues it’s shake-down cruise.

Wyndham Capital Mortgage rates:
Conventional 30yr Fixed ………………..4.750%
Conventional 15yr Fixed…………………4.250%
Conventional 5/1 ARM……………………3.375%
FHA 30yr Fixed……………………………4.750%
FHA 15yr Fixed……………………………4.250%

Edward Mayor, Wyndham Capital Mortgage (704) 369-2629 ed.mayor@wyndhamcapital.com

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