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Another surprise announcement today came from Goldman Sachs when they reported their 2nd quarter earnings beating the streets. Goldman reported earnings of 3.44 billion, or $4.93 per share, when analysts had expected $3.57 per share. Stock futures pointed upwards on the news and the mortgage backed securities traded down. Long term mortgage rates like the 30 year fixed and 15 year fixed rates are determined by mortgage backed security trading.
What does all this mean for mortgage rates? The better than expected news will cause investors to move money into stocks. The markets compete for the buyers, therefore when one sector is rallying others trend downward. Current mortgage rates worsened slightly today with the average 30 year fixed rate coming in at 5.42% with an APR of 5.6%.
But all in all the news has been good for long term mortgage rates. Recently the stronger dollar and lower oil prices have helped to bring the 30 year mortgage rates down about .5% over the past 3 weeks. If mortgage rates can maintain this downward trend mortgage refinance activity and purchase activity will pick up soon. Mortgage rates at or near 5.0% will motivate both buyers and homeowners to get off the fence.
Fannie Mae and Freddie Mac recently announced plans to more aggressively help homeowners who find themselves underwater with their mortgage. Both GSE’s plan to increase the allowable loan to value limits from 105% to 125% for loans they currently service. Look for more details on this announcement soon.
Written by Alan Efting
Bradford Mortgage Company
www.alanefting.com
Posted July 14th, 2009 by Armen Hareyan
