Quantitative Easing - QEII

[nytransplant]

So I'm just about to get to a lock period for a mortgage (jumbo-conforming).  The BOA rep today said that the QEII might actually cause mortgage rates to increase.  Has anyone else heard this?

As of today they are offering the same rate for a 30 and 45 day lock.  4.25% with no points or 3.875% with 1 pt. + the $1500 lender credit. 

Any thoughts.

 

[sgip]

No one can accurately tell what QE II will produce in the way of lower mortgage rates. We have to see precisely what the Fed is buying. If they purchase 4.0 to 4.5% mortgages, rates will remain stable. The Fed did most of their buying in higher rate instruments during the last easing. If they buy 3.5% mortgage coupons then rates will fall. If the 3.0 MBS ever comes into being and the Fed starts buying them, expect rates to plummet.

For now, if you're in process take what you've got. If you're waiting to start the process, watch what the Fed is buying.

My .02c

Soylent Green Is People.

 

[irvinehomeowner]

I'm actually a bit conflicted regarding low mortgage rates.

While I understand the concept of rising rates creating downward pressure on prices... I don't believe in the proportionality of that theory.

What do you think is more likely to happen... A) rates come down to a point where someone can afford 20% more home (price wise) or B) rates will go up and prices will come down 20%? For the second scenario... rates have to go up only enough so that your monthly is equal to what it would have been in scenario A... which the math just doesn't seem to support.

 

[sgip]

I think "C" will happen: rates will stay low, but prices will continue to fall by 10-15%. 20% is not impossible, but unlikely. More shadow inventory will come to light, greater emphasis on foreclosure over short selliing, incomes not increasing enough to support higher prices.

As for the price drop question - everyone buying should weigh if they are willing to lose up to 20% of their home value, yet be able today to purchase in the neighborhood they want. Sure, if prices drop by 20% in 2011-2012, will you get the home you want, or be out bid at auction or outclassed in offer strength?

My .02c

SGIP

 

[irvinehomeowner]

I would love for "C" to happen.

I can have my low rates and eat it to.

 

[test]

No one can accurately tell what QE II will produce in the way of lower mortgage rates. We have to see precisely what the Fed is buying. If they purchase 4.0 to 4.5% mortgages, rates will remain stable. The Fed did most of their buying in higher rate instruments during the last easing. If they buy 3.5% mortgage coupons then rates will fall. If the 3.0 MBS ever comes into being and the Fed starts buying them, expect rates to plummet.

For now, if you're in process take what you've got. If you're waiting to start the process, watch what the Fed is buying.

My .02c

Soylent Green Is People.

The fed isn't buying mortgages, it's buying treasuries.  It also doesn't buy rates, rates are dependent on the price.

 

[usctrojancpa]

But

No one can accurately tell what QE II will produce in the way of lower mortgage rates. We have to see precisely what the Fed is buying. If they purchase 4.0 to 4.5% mortgages, rates will remain stable. The Fed did most of their buying in higher rate instruments during the last easing. If they buy 3.5% mortgage coupons then rates will fall. If the 3.0 MBS ever comes into being and the Fed starts buying them, expect rates to plummet.

For now, if you're in process take what you've got. If you're waiting to start the process, watch what the Fed is buying.

My .02c

Soylent Green Is People.

The fed isn't buying mortgages, it's buying treasuries.  It also doesn't buy rates, rates are dependent on the price.

But MBS prices do move somewhat closely with long bond rates.  If the 10th bond rates drop you can expect MBS rates to drop.  The MBS rates are based upon a risk free rate (treasury bonds) plus a risk premium.  We will see  a 30 yr fixed mortgage rate at 0pt at 4% or lower in the next 3-4 months. 

 

[sgip]

TEST is correct. The Fed is currently expected to buy Treasuries, but will likely purchase MBS's - based on price, not rate. When we talk about coupons and basis points, its easier to slim down the jargon and present what most readers know - rate numbers. As Treasury debt is  bought up, investors do gravitate towards MBS's, as we saw yesterday. 30 year paper went South after the Fed announced what they were doing. MBS's improved throughout the day. There was a snap reaction in MBS's for the worse, but quickly recovered since.

 

[test]

USC I hope you are right but the fed clarified that they will be mostly purchasing 10 year or shorter treasuries.

The Treasury 30-year bond fell the most in almost two months after the New York Fed said in a separate statement that 86 percent of its purchases will target bonds coming due in 2 ? to 10 years.
http://www.bloomberg.com/news/2010-...-600-billion-of-securities-to-aid-growth.html

Treasury 30-Year Bonds Tumble as Fed Purchases Other Securities
http://www.bloomberg.com/news/2010-...-as-federal-reserve-plans-debt-purchases.html

"The yield on the 30-year bond touched a three-month high after the central bank said yesterday it will buy fewer longer- term securities than analysts had expected."
http://www.bloomberg.com/news/2010-...-fed-says-it-is-prepared-to-ease-further.html

 

[usctrojancpa]

USC I hope you are right but the fed clarified that they will be mostly purchasing 10 year or shorter treasuries.

The Treasury 30-year bond fell the most in almost two months after the New York Fed said in a separate statement that 86 percent of its purchases will target bonds coming due in 2 ? to 10 years.
http://www.bloomberg.com/news/2010-...-600-billion-of-securities-to-aid-growth.html

Treasury 30-Year Bonds Tumble as Fed Purchases Other Securities
http://www.bloomberg.com/news/2010-...-as-federal-reserve-plans-debt-purchases.html

"The yield on the 30-year bond touched a three-month high after the central bank said yesterday it will buy fewer longer- term securities than analysts had expected."
http://www.bloomberg.com/news/2010-...-fed-says-it-is-prepared-to-ease-further.html

But they will cause a crowding-out effect when bond investors will gravitate to the next best option that provides a similar level of security with a little more yield (FED wants the "risk-on" trade)...that's Fannie Mae and Freddie Mae backed MBS bonds.  The 2-year, 3-year, and 5-year bonds yields are at historical lows. 

 

[ps99472]

So I'm just about to get to a lock period for a mortgage (jumbo-conforming).  The BOA rep today said that the QEII might actually cause mortgage rates to increase.  Has anyone else heard this?

As of today they are offering the same rate for a 30 and 45 day lock.  4.25% with no points or 3.875% with 1 pt. + the $1500 lender credit. 

Any thoughts.

I don't know all this financial mumbo jumbo.. but checked cashcall, amerisave and zillow.. seems like rates did drop... close to getting a 15yr conforming for 3.5% no fees.. 

as for your situation ny, is this a new home purchase mortgage?  the why don't you do the 4.25%, use the lender's credit to pay for all the fees ($1500 should be enough to cover all fees), hopefully you don't have a pre-payment penalty or seasoning clause, then refi soon after...  i think its pretty hard to get a decent rate on a new home mortgage..  you don't want to lose your home so the lender has the upper hand...  when you refi you'll have better leverage...

 

[nytransplant]

Update:

I got a 4.125% no points offer yesterday so i pulled the trigger.  Good thing to b/c it looks like rates are slightly higher today.

 

[octrends]

Update:

I got a 4.125% no points offer yesterday so i pulled the trigger.  Good thing to b/c it looks like rates are slightly higher today.

what kind of loan it was? under 417k or more

 

[qwerty]

Update:

I got a 4.125% no points offer yesterday so i pulled the trigger.  Good thing to b/c it looks like rates are slightly higher today.

what kind of loan it was? under 417k or more

see the first post of the thread, it was a jumbo conforming, over 417K but below 729K

 

[nytransplant]

Update:

I got a 4.125% no points offer yesterday so i pulled the trigger.  Good thing to b/c it looks like rates are slightly higher today.

what kind of loan it was? under 417k or more

see the first post of the thread, it was a jumbo conforming, over 417K but below 729K

that's right.  I guess it's also called supper conforming

 

[lcms2002]

Update:

I got a 4.125% no points offer yesterday so i pulled the trigger.  Good thing to b/c it looks like rates are slightly higher today.

what kind of loan it was? under 417k or more

see the first post of the thread, it was a jumbo conforming, over 417K but below 729K

that's right.  I guess it's also called supper conforming

Who is your lender? Can you recommend your agent to this board?

 

[nytransplant]

I got it with the BOA lender associated with Sonoma.

 

[lcms2002]

Today Fed announced QEII schedule until Dec 9, 105 billions in next 19 trading days will pumped into market. I wonder what kind of impact will be on mortgage rate in the following month.