Mortgage rates are falling!! and other news

Good morning. Can you believe 2009 is almost half over, and summer is just around the corner?

As quickly as mortgage rates rose to their highest levels in a year, we are seeing Treasury and Mortgage bond rates drop late last week and this morning. There is resumed confidence in the US dollar after comments from Russian Finance Minister Alexei Kudrin that Russia has no immediate plans to switch from US currencies for their reserves. (If you'll recall, it was speculation that Russia would start selling off their US Treasuries that led to the huge rise in bond yields last week.) In addition, Japan has indicated that "investors have nowhere else to put their money that is more secure, nor paying higher yields than US Treasuries."

Bond yields have dropped from just over 4% last week to around 3.7 right now. Mortgage rates are following the drop. However, before we get overly excited, a survey of Bloomberg analysts forecast that the bond yield might not drop lower than 3.65%.

However, there are other economic concerns now, which has the stock market diving as investors take profits and sit back and wait for other news that validates the recent rally. The DOW is currently down over 200 points, NASDAQ down more than 50 points, and the S & P has broken through a key resistance point of 925, now at 920. To make matters more precarious, this is a "triple witching week" which is always volatile. (Triple witching occurs the 3rd Friday of the last month of each quarter. It is the expiration of stock index futures, stock option futures, and stock options.) Traders and investors are required to close out these option trades by this Friday, or allow them to expire worthless, or at a potential loss. This is what causes the extreme volatility in weeks like this one.

On the good news front, oil prices are down from last week's highs, and most commodities are down substantially as well.

For those of us looking for more reform and regulation of our financial systems, stay tuned as President Obama will be announcing on Wednesday more reforms which will give the Federal Reserve broader powers to prevent the kind of "economic meltdown" we have just experienced over the last 2 years. It is reported that a comprehensive plan will be announced which will provide for a stronger framework for consumer and investor protection.

The G-8 (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States) is currently meeting,..... and is working on worldwide regulations, as well as an "exit strategy" to pouring money into worldwide economies. Treasury Secretary Tim Geithner is at the meeting representing the United States. In addition, there is a separate meeting being held by India, Russia, China and Brazil, currently the 4 strongest economies in the world. Now that it appears that economies world wide are reaching some level of stabilization, a plan (exit strategy) is required to return us all to some level of normalcy.

President Obama is also meeting with the AMA today, discussing his plans for health care reform The Congress is under a mandate to deliver a health care reform package to the President by October 2009. One option being discussed is a U.S. government owned insurance company to provide health care insurance. This would be in competition to other privately owned health care insurance providers, and forgive me speculation, but it appears that this would definitely help reduce the high costs of health care insurance in this country. Obama is urging the AMA to back his plan, while the plan is still meeting a lot of resistance from the Republican party.

This is likely to be a very volatile week on wall street, and is also potentially a volatile week in terms of mortgage bonds. Please stay tuned. I'll keep you updated as news breaks. For now, we're on rate watch.

*Best rates, as I write this: (remember these rates apply to those with the best scores, highest equity positions for purchase and rate and term refinances.)

30 year fixed 5.375% APR 5.41%
5/1 ARMs 4.5% APR 4.622%
FHA 5.5% APR 5.71%

Stay tuned as "our economy turns" this week. I'll do my best to keep you posted.

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.