Mortgage Rates Edge Up

Mortgage Rates Edge Up

September 21, 2007

WASHINGTON -- Long-term home-mortgage rates rose slightly this week, with the 30-year fixed rate averaging 6.34% compared with last week's 6.31%, according to Freddie Mac's weekly survey.
The mortgage rate averaged 6.40% a year ago.
The reduction in the Federal Reserve's target rate earlier in the week should help bring down short-term interest rates and "should also dissipate some of the volatility in short-term interest rates we observed earlier," said Frank Nothaft, chief economist at Freddie Mac.
The one-year, Treasury-indexed adjustable-rate mortgage inched down to 5.65% from 5.66% in the wake of the Fed move, in which it trimmed the fed-funds rate to 4.75%.

This information has been copied directly from the Wall Street Journal.

Educated consumers know and understand that The Fed cutting short term rates does not directly affect mortgage rates.

30 Year Fixed

Mortgages rates are a funny animal. These last few weeks, mortgage rates dropped dramatically due to the anticipation the Fed's will drop its rate on September 18th. Here is the catch, the bond market has priced in a 3/8th drop in the Fed Rates. What this means is, if the Fed only drops rates by 1 quarter, mortgage rates would actually go up! If they drop the rate a full half percent, most likely mortgage rates will stay the same. Mortgage rates have already been adjusted for the assumption of what the Fed's will do. It is pure speculation as well!

As the owner of a mortgage company, I have many clients that will want to hold off in locking their interest rate, they feel it is better to wait until the Fed's meet. The client feels that mortgage rates will drop when the Fed lowers their rate, at this time it may be to late. Especially if the Fed holds off entirely, then you will see mortgages jump back up.

Remember to find a mortgage company that can lock you in today and re lock your mortgage rate if the rates decide to drop.



Call me anytime about mortgages, rates or our take on the economy!

Bill Nickerson
President
Emerson Lending Company
978-264-4803

Rants and Raves about Mortgages: Angry at the Media

Rants and Raves about Mortgages: Angry at the Media

Mortgage Rates Drop

Mortgage rates continue to drop this week. The 30 year fixed rate ended at 6.125% with 0 points today. In June we were at our high of 6.875%. The economy is forcing the rates down in order to assist in the housing market. This has now become the perfect time buy your next home or refinance. House prices are low and mortgage rates are still at all time low.

Make sure when you are looking at mortgage rates, that the APR (annual percentage rate) matches the rate! If the APR is different, it could be there are hidden fees.

Yields on interest-rate futures fell as traders priced in higher odds of cuts in the Fed's target for the overnight lending rate between banks, which has been 5.25 percent since June 2006. September futures on the federal funds rate yield 4.93 percent, down 6 basis points. The yield fully prices in a half percentage point cut by Sept. 18.

Former Fed Chairman Alan Greenspan spoke in regards to the economy and said "The behavior in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock-market crash of 1987,''

Let's hope that Ben Bernanke can live up to the great Alan Greenspan!

Have a great night and always feel free to email me with questions or concerns about the mortgage industry!



Bill Nickerson
President
Emerson Lending
Acton MA
bill@emersonlending.net