Today's Market Update
Wednesday May 27, 2009 5:32 PM ET

Current Trend Direction:

Bonds Lower/Interest Rates Higher

Risks favor: Locking

Current Price of FNMA 4.00% Bond- 96.84 -207bp

30 Year Fixed Rates
5.00% APR 5.202%

30-Year Jumbo Fixed Rates
5.75% APR 5.856%

5/1 Jumbo Arm
4.50% APR 4.61%

7/1 Jumbo Arm
4.75% APR 4.70%

Concerning developments in the bond market today. As mentioned yesterday Mortgage Bonds reacted poorly to the news the government is adding to the supply of treasury's. Well today's treasury auction results while not terrible, sparked a massive sell off in the bond and stock markets.

Mortgage Bonds lost a staggering 207 basis points in addition to the 165 basis point losses just over the past few days. Needless to say this is bad news for mortgage rates.

They say "When you snooze, you loose". As you know, I have advocated getting your mortgage application in and locking into an interest rate while they are low. For those of you who listened, congratulations and for those who didn't, better luck next time. When and if there is a next time in the near future.

The Dow Jones lost 173 points to finish the day at 8300. typically the bond and the stock markets move in opposite directions, but stocks reacted negatively to the bond market news as well.

Existing Home Sales were reported at 4.68M, higher than expectations of 4.65M. Inventory of unsold homes rose to a 10.2 month level from April's reading of 9.6, but well below the 11 month reading seen in November. The supply of homes above $750,000 is now at a 40-month supply. Unfortunately this area of the market has not received any attention by helping improve the costs and availability of jumbo loans.

So far Fixed rates have climbed higher by about one half of one percent to about 5.50%- No points. Three, Five and 7 year Arms have maintained there rates, but will rise if the bond market does not improve quickly.
We continue our bias toward locking rates for now.