Rates
Well it has been all about the Federal Reserve and rate for the last 4 weeks. And if you don’t think the Federal Reserve isn’t more powerful than the President of the US, you would be mistaken.
This whole mess started about 4 weeks ago, when comments started to come out from the Federal Reserve that they were going to start to taper off the QE3, or qualitative Easing #3, along with QE2 and QE1.
Basically the Federal Reserve over the last 5 years has been purchasing Bonds, and specific to us Mortgage Backed Bonds. More recently, they have been buying MBS at the tune of $85Billion per month.
The more people purchasing bonds, the higher the price goes and the lower the Yield goes. Yield translates to mortgage interest rates, so the lower the Yield, the lower the rates go.
So since comments that stated in early May up until Wednesday, lots of talk about the Fed reducing the QE programs.
Then on Wednesday, the Fed said that they are going to start tapering off beginning at the end of this year and through 2014. Which is quite a bit sooner than most traders like.
The Fed went even further by saying that they are not going to hold their bonds that they bought but are going to start selling them as well.
Chaos!
The stock market sold off and the bond market sold off. This has translated into HUGE losses and HUGE increased rates.
Never have we seen bond market move this month, or atleast in the 10+ years I have been following it. This included the HUGE market dump we say in 2008.
So what is the outcome!
Rates will probably keep climbing for some time, at a quite rapid pace I am assuming. I would suspect that after today we will not see any government loan in the 3’s and conventional loans will be ticking up to the 5’s.
But the sky isn’t falling, well yet.
Rates are still GREAT, during the hay day of 2006, we had rates in the 6.50% and were still selling homes like they are going out of style.
The people who are being hurt the most isn’t the home buyers, it is anyone who sat on the fence post for the refinance.
So refinancing is pretty much off the table for most people.
But purchases are still looking good, we still have low rates, 100% financing, and underwriter guidelines have been loosening up, believe it or not.
Here is a pretty good article that wraps it all up in a nice bow:
http://www.mortgagenewsdaily.com/consumer_rates/313499.aspx
Rural Development:
The US 2013 Farm Bill went down in flames yesterday, which was unexpected! With more Republicans voting against it than anticipated.
We want this farm bill to pass, because it will allow Kuna to be considered RD for quite a few more years!