Market Update

I am not sure how best to describe how most of us feel about this economy and our place in it; especially for me as a small business owner. It makes you wonder who you can place your faith with; however it is also during these times that our instincts are sharpened which hopefully translates into the resurgence of strong stable business structures.

As a general rule, I find that when people are giving you advice there exists a direct correlation between the octane level of their spill to the lack of credibility. By that I mean, in general, the louder someone pitches their views the less likely I am convinced of their credibility. But I am even more skeptical of anyone who whispers their “can’t miss, once in a lifetime opportunity” in my ear.

Commentaries aside, interest rates have remained about the same for the past couple of weeks. Ten year bond yield is hovering just under 3%, as compared to December 2008 when the same bond yield was just over 2%, but the mortgage rates did not go up by the same spread. This is an indication of the MBS (mortgage backed securities) trading closer to treasuries; something I thought was a likely scenario. For all the borrowers who are still waiting for lower rates, you will have to pay close attention to the bond yields. The movement of the bond yield will be an accurate indicator of the direction of the mortgage rates. Any sharp movements of the bond yields will definitely cause the same movement on mortgage rates.

Something to keep in mind, more and more lenders are kicking in extra benefits for all the borrowers who have maintained a superior credit history and have plenty of equity in their homes. It could be a reduction of rate or partial point reductions. There are still benefits to maintaining financial responsibility and good credit ratings.