Mortgage Market Update - My 2 Cents

Current Price of FNMA 5.5% Bond:  $98.03, -3bp  

Since my warning to lock on May 9th, we have seen a decrease by .84 basis points. This has led to a rate deterioration of about approximately .125% - .25% depending on the lender.

Currently, the Bond Market is holding it's own, but there has been a lot of money taken out of Bonds lately and put into a flaming hot Stock Market. As there are no major reports being issued for the next few days, the Stock Market will most likely have the greatest impact on Bond prices.

Bond Prices are nearing an important floor of support at the $97.97 level, just 6bp below present levels, and also matching the lowest prices of the year hit in late January.  We will want to be patient and see if this floor can stop the recent downtrend. 

On brand new transactions, we are going to advise Cautiously Floating as the Bond hovers just above this floor of support.

China has also agreed to invest roughly $3 Billion in the Blackstone Group, a prominent and powerful U.S. private equity firm. Will this money be taken away from their investments in foreign bonds? If so, rates could continue to increase.

Larry Morris is a loan Officer with Equipoint Financial Network in Newberg, Oregon. He specializes in relocations and Sherwood, Oregon neighborhoods and Yamhill COunty. He can be reached at larry.morris@equipoint.com . His website is www.PDX-Mortgage.com . This material is copy protected 2007 by Larry Morris, Mortgage News that Matters. All Rights Reserved His opinions do not necessarily represent the views of Equipoint Financial Network.

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