MORTGAGE RATES STILL UNDER 5% !

Mortgage rates have continued to stay in a narrow range of 4.5-4.75%. Home purchases are picking up and refinances have continued at a steady pace as homeowners take advantage of these excellent low rates. The fed is continuing to hold down long term rates by purchasing treasury bonds. My forecast remains unchanged : rates should stay in this range for the next few weeks to months. I am anticipating the stock market to retreat in the late summer to fall, at which time, bonds should continue a more vigorous rally which will lead to lower rates.

Consumer sentiment appears to be improving in the housing market. Going forward,the overall theme to note is that lower rates and the fed's support of all lending institutions should help spur mortgage lending and be supportive of the real estate market. There are incentives and new products available to encourage home buying. New products are also available for REO homes.
Realtors should be seeing more activity in the resale market as low rates and low prices create opportunities.

FED MOVES BRINGS LOWER RATES 4.5%

My prediction of a bond rally did materialize although it was larger than I anticipated. The fed's announcement of his intentions created one of the largest one day bond moves ever seen. Basically, the fed announced that he will print money out of thin air and use those funds to buy an enormous supply of longdated treasury bonds, as well as mortgage backed securities. Buying 30 year treasuries supports bond prices and gives us low mortgage rates. Buying MBS will hopefully provide liquidity in the funding of mortgage loans.

What these actions mean for the real estate: lower rates will support the refinance market going forward. The stock market continues to look for that elusive bottom. I anticipate improvement in the stock market by late Spring, early summer which along with lower rates and availability of mortgage funding should provide a boost to the real estate purchase market. I think that agents can begin active marketing within the new few weeks to homebuyers, and should definitely encourage sellers to use this window of opportunity to price their homes to sell. Barring any unforeseen new announcements related to the economy, the summer could provide a welcome relief and more optimistic tone for real estate activity.

Going Out on a Limb: Looking For A Small Bond Rally

What a difference a week makes. Several big rally days in the stock market and everyone is calling a bottom. The financial stocks are celebrating like the worst is over and unexpectedly, the bond market has held up well. While I don't expect a huge rally in the bond market, I am seeing technical signs that the stock market will retreat soon and send investor money back into the safe haven of bonds. I still expect a trading range for bonds until the fall.

The competing themes will continue to be money flowing into bonds for their safety VS. money leaving bonds because of the increasing supply and fear that the multi-decade rally in bonds will be the last bursting bubble.

I am seeing increased purchase activity as rates stay under or close to 5% and home prices are perceived as attractive. I foresee rates staying at these levels for the time buying, esp. since the FED has stated he will buy longterm bonds if needed to keep mortgage rates low. He has no other way to keep rates down since they have already cut overnight lending rates to zero.
Refinance activity has been strong as well as clients are realizing that these rates are exceptional. I continue t0 advocate locking in these rates at these levels.
Although pessimism about the economy and housing still persists, I am seeing more buying interest and customers calling to prequalify. First time home buyers and financially secure move-up buyers are seeing the current situation as a great opportunity. Agents should use this time to pursue marketing strategies and prepare for these active buyers.
I am changing my outlook on the bond market. I previously expected an exhaustion rally sometime this spring before seeing rates rise. I am considering that further economic weakness in the fall may lead to the timing of a final bond rally in that time frame.
The implications of having lower rates for most of the year will have a positive effect on the purchase and refinance markets.