As the Dow Jones industrials plunged under 10,000, the first time it closed below that level since 2004, mortgage rates held steady today in Orange County, said Jeff Altman, a mortgage broker with WestCal Mortgage in Orange.
The best rate today on a 30-year fixed-rate loan up to the old conforming limit of $417,000 was 5.75% with a one-point fee, same as last week, Altman said. And rates on larger loans up to nearly $730,000 are still about 6% with a one-point fee, he said.
However, investors loaded up on mortgage-backed securities today as they fled bonds, and consumer rates may come down soon as a result, Altman said. When investors bid up the prices of mortgage securities, the yield drops on those securities, and that usually translates to lower consumer rates.
Rates could fall as much as half a percentage point if mortgage securities remain strong and stocks weak, he said.
And here is more meltdown coverage….
- 59% say economic depression likely. Do you agree?
- Crisis pushes Dow under 10,000, 1st time in 4 years
- Three super banks to dominate O.C. lending
- O.C. ‘08 bankruptcies jump 93%
- Europe’s banks melting down, too!
- Subprime nation
- Orange County officials prepare for financial storm
- O.C. lawmakers explain their bailout vote. What do you think?
- Mortgage markets yawn at bailout
- OCTA out $228,000 after Wall St. bankruptcy
Regarding today’s crash: What did anyone expect? The investors have no confidence in these corrupt politicians. This bailout is just one more example of the indivisible handjob stroking irresponsible CEOs and CFOs with billions so that they can run the American economy even further into the ground. So much for Keynesian economics. If the goal is to stimulate the economy, why not give the money directly to the American taxpayers? The government could do twice as much good for the economy by returning half as much money (as the bailout requires) directly to the hardworking American taxpayers. A bird in the hand is worth two in the bush administration.
I thought mortgage rates (for fixed, at least) tended to follow the yield on the 10-year T-Bill. This is the first time I’ve ever heard they are influenced by the yield on MBSs. Also, am I to understand from this guy that investors are dumping Treasurys and moving to MBSs? Doesn’t sound right to me.
Keynes talked about “priming the pump” and running a small deficit during recessions to get the economy moving again. He never advocated massive deficits year after year after year so that the government became the economy.
Josh,
Fixed mortgage rates are more directly tied to mortgage-backed securities than to Treasuries. However, there is an association with the 10-year Treasury (since most 30-year loans are not actually held for 30 years). Bonds compete for investors’ dollars, and if the yield on the most secure investment, a Treasury, rises, that forces issuers of mortgage securities to offer higher yields, which then results in higher consumer rates. Yields on mortgage securities can also rise independently of Treasuries, for example as loan defaults rise.