Given the economic backdrop (high unemployment, etc.) we feel this move is close to a bottom. Trouble is, picking bottoms are like catching falling knifes, hard to do without some pain. Best bet for Austin mortgage borrowers is to use the float down option ("option to lower your interest rate one time") to guard against a reversal (rally).
Austin mortgage borrowers: best to take a conservative approach given the amount of volatility we expect.
USDA UPDATE: In a nut shell, the USDA program is out of money (except for disaster funds in a few areas). The Senate now has three competing bills so the work out process has begun. Nothing scheduled on the Senate floor so this could take some time. USDA issued guidance stating that they would issue condition commitments so we could proceed with the loan process but not close until the program was funded. USDA has now pulled that guidance to issue conditional commitments. As you can see, this is a mess. Investors such as Chase, etc. will not take locks unless you have a conditional commitment or are in a county that has adequate disaster funds available as they see this as hedging a “phantom” pipeline.
Earlier today, treasury yields fell to their lowest levels in a month as Greece continues to slip into the ocean. Stocks are also in the soup, down 74 points on the Dow. A couple of missed earnings reports and a sack of rotten Gyros did the trick.
Currently, the 10 year note is up 10/32’s to yield 3.76%, very close to our range high (low yield) expectations of 3.75%. Mortgage backs are plus 4/32’s on the day. Stocks are up a baker’s dozen on the big board as very overbought conditions are in a dog fight with stellar 1st quarter earnings.
The market was doing just fine until the headlines broke the minutes of last month’s FOMC meeting (Fed Open Market Committee). The “Street” didn’t take kindly to comments regarding treasury asset sales, consideration of a .25 bps hike in the Discount Rate, and a general hawkish tone once they can determine that a recovery is “self sustaining”.
