we were actually considering buying a house in the next few days and then I hear this on the news tonight. Are we not going to be able to get the good interest rates that we have been having recently? Or, when would that kick in likely?
Interest rates are actually really low right now. I haven't been following things, but my guess is that many of the MBS or CMBS are better risk/reward tradeoffs for fixed income investors right now than treasuries are. A lot of that money is probably "flying to safety" right now in blue chip corporate debt or MBS/CMBS.
It seems unclear which way MBS yields and thus borrowing costs will go in the short run. Today's conforming wholesale rates for 30-year money were 4.076%...even if there is a modest bump money is still free in real terms to me with the real CPI hovering around 6%ish according to Shadowstats.
I would be interested to know what lenders' lock policies are right now with all of the uncertainty. Is your lender offering a lock? If so, on what terms?
Interest rates are actually really low right now. I haven't been following things, but my guess is that many of the MBS or CMBS are better risk/reward tradeoffs for fixed income investors right now than treasuries are. A lot of that money is probably "flying to safety" right now in blue chip corporate debt or MBS/CMBS.
It seems unclear which way MBS yields and thus borrowing costs will go in the short run. Today's conforming wholesale rates for 30-year money were 4.076%...even if there is a modest bump money is still free in real terms to me with the real CPI hovering around 6%ish according to Shadowstats.
I would be interested to know what lenders' lock policies are right now with all of the uncertainty. Is your lender offering a lock? If so, on what terms?
I wouldn't worry in the immediate near term. It is not much surprise that the U.S. got downgraded as rating agencies have been warning of this for a while. Rates have been artificially manipulated lower with the Fed's QE1 and QE2 bond buying. With the recent sputtering of the U.S. economy and fears of deflation re-emerging, I can almost guarantee that the Fed will announce another round of balance sheet expansion or re-investment of maturing securities into longer term bonds at their next meeting. They won't call it QE3 but it will be more monetization of the nation's debt. Also, although there is no question that the U.S. has serious deficit issues, the near term concern is with the Eurozone crisis and this has actually caused mortgage rates do drop in the past week.
Unlike other countries, the U.S. has the ability to print more $ so the risk of actual default is slim to none. The alternative is for the fed to continue to monetize the debt. Eventually bond vigilantes will wake up and rates will soar but not while you are trying to secure financing on your deal.