It's Friday and Mortgage Rates are dropping!!

After a month of rising mortgage rates and rising yields on the 10 year T bond, we are finally seeing the pull back that we'd been hoping would occur. There are multiple reasons for the drop, but the most significant is a believed to be that a Wall Street index fund showed confidence in the US dollar by making large purchases of shorter term bonds, and other funds followed. Also, a Japanese finance minister announced that they will continue to buy US debt because they have "unshakable" confidence in the US dollar. (The rise in rates had begun as countries, such as Russia, India and Brazil had previously announced that they would sell US debt in favor of more stable multinational currencies.) It is now anticipated that Treasury yields should continue to drop, according to a spokesperson at Citigroup.

Yesterday, the yield on the 10 year bond hit 4% before it turned back down. Is that a new point of resistance? Let's hope it is, because mortgage rates hit almost 6% on the 30 year fixed before we saw the reversal begin. This morning we are seeing the yield back around 3.8% - a huge drop. It is currently at 3.77%. The best rates on 30 year fixed have also pulled back to as low as 5.375%* for the very strongest of borrowers.

The Feds still are reluctant to comment on whether or not they will resume purchasing bonds to keep yields low. They are still watching to see how the market handles the fluctuations, and how the fluctuations and higher borrowing rates are affecting consumers. We expect to hear more about this after the next FOMC meeting in 2 weeks.

Yesterday we saw the price of oil top $72/barrel - up more than $5 in just a week. We've watched gas prices rise just as quickly. There is now discussion among traders that oil prices could hit $80/barrel by year end. Let's hope not. We're at almost $3 per gallon now. Oil is currently trading at just under $72/barrel.

The eyes of the world, and Wall Street, are on Iran today. Iran is holding presidential elections and are reporting what could be record breaking turn out at the polls. This election could somewhat alter the course of politics in that region. The primary rivals in this election are the current conservative, hard-line, President Ahmadinejad, and reformist Mousavi, who favors more freedom for the people and closer ties with the United States. Election result are expected to be released on Sunday.

The Michigan consumer confidence index released this morning, showed an increase in confidence for the sixth straight month. This index shows us that consumers are beginning to spend again, and is a good signal that perhaps the worst truly is behind us.

The very popular 5/1 ARM loan is doing its coming and going thing. Currently, I see just a few lenders offering this product, with rates, for the most part, significantly lower than the 30 year fixed rate loan. The best rates on this loan, this morning, are at 4.5%*. Again, I feel that I must caution that this loan is not necessarily the best way to finance your property. We should discuss the pros and cons of this type of loan, before you make this decision. It is always important to remember that while 4.5% is a very attractive rate, it is almost certain to rise in 5 years, when this loan becomes adjustable. The Adjustable rate mortgage is a special offer by some lenders when they find investors with an interest in offering this type of financing. When these funds run out, this loan can become unavailable and/or rates for the product being offer can change significantly.

Have a fabulous weekend.

Best regards,


Shelby Bateson
Town & Country Mortgage
10228 SW Capitol Highway
Portland, OR 97219
503-819-6545 phone
1-866-626-2828 fax
Lic # ML-3604
http://www.shelbytncmortgage.com/

* Best rates apply to borrowers with Loan to Value at or below 90% and credit scores of 740+. ** Best FHA rates apply to credit scores of 660 and up. There are upward rate adjustments for lower credit scores on all loan programs. All rates are subject to change without notice. These rates are NOT APRs - do not include closing costs.