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Checking with a few sources today on trading desks, but it looks like the bailout is both a blessing and a curse for mortgage rates.   The banks needed the bailout to be saved, however the expected excess supply of mortgage bonds to be put out on the open market will reduce their prices, leading to higher rates.   The low interest rates that we experienced shortly after Fannie & Freddie were put into conservatorship have quickly spiked since the passage of the government bailout.   More updates to follow soon on market chatter.

The credit markets have improved significantly this past week, most notably the dramatic drop in the interbank offering rates (LIBOR).  The improved outlook was also accompanied by more action from the Federal Reserve, who increased the interest rate they pay banks for excess reserves by 10 bps.   What does this mean for you?   The Fed is acting in the best interests of the banks to encourage them to borrow short term, and lend long term, the crux of our credit markets.   We've seen a good drop in mortgage rates this past week, most notably on the 30 year fixed product.   Call us today for a custom quote for your mortgage.

Chris

(310) 612-9691 cell

chris@sturdivantcapital.com