Monday’s Market Trends Recapby Tim Manni
This week’s issue of HSH’s Market Trends Newsletter, “Mortgage Rates Nudge Higher,” examines how recent economic conditions have affected the movement of mortgage rates. This issue also discusses the substantial losses to both Fannie and Freddie’s mortgage portfolio, the Fed’s decision to leave interest rates unchanged, and how various economic indicators like worker productivity, Consumer Comfort, and Factory Orders mesh with the current state of the market:
August 8, 2008 — Following Freddie Mac’s lead, Fannie Mae made a late-week announcement of substantial losses from their mortgage portfolio, and included a notation that new business with the GSE would be accompanied by higher loan fees. As well, Fannie announced that it would no longer purchase Alt-A mortgages starting next year. Alt-A loans — typically those with limited documentation or other issues — are at the heart of the most recent losses on mortgage investment books.
HSH’s Fixed Rate Mortgage Indicator (FRMI), the overall average interest rate for 30-year fixed-rate mortgages (FRMs) of all stripes — including conforming, jumbo and expanded conforming offerings — lifted by four basis points (.04%), while the overall average for 5/1 Hybrid ARMs slipped back by six BP to finish at 6.62%.
The Federal Reserve Open Market Committee met this week but made no change to policy, leaving short-term interest rates unchanged. They did, however, characterize the Committee’s inflation concerns as “significant.” With the economy still weak, the Fed is likely to keep rates low to provide it with some support…
HSH’s free, weekly Market Trends Newsletter, an in-depth analysis of various financial markets of the week prior, is published every Monday. Email subscribers — receive it in your inbox by Friday night, so sign up today!