Greenspan's Mortgage Blog

"Volatility will once again be the key word in the markets today, as a number of Stock options and futures expire. This volatility has already jostled Mortgage Bonds around quite a bit in the early hours of trading.

In other news, the auto industry finally received some relief, as President Bush announced a deal that will provide GM and Chrysler with $13.4 Billion worth of government loans in exchange for restructuring.

Currently, Bond prices are sitting just above an important level of support and may move higher due to market activity.

In this market anything can happen, but right now rates are still low.  Take advantage of the savings while we are at these historical lows.

Remember - Bird in the hand is better than 2 in the Bush!"

Joseph Greenspan

President

First Fidelity Home Mortgage of Wisconsin, LLC

"Bonds prices declined yesterday afternoon and so far this morning, good news for Stocks is keeping the selling pressure on Bonds. GMAC received a $6 Billion lifeline today from the Treasury to help stave off bankruptcy or a shut down. Stocks are moving higher on the good news, which is pulling more money out of Bonds.

In other news, Consumer Confidence came in at a record low of 38.0. This time last year, Consumer Confidence was at 88.6. So there's been quite a decline during 2008.

Currently, prices look like they could fall further before attempting to make up any ground. Therefore, I recommend locking on loans that we need to close in the next couple of weeks."

Joseph Greenspan

First Fidelity Home Mortgage of Wisconsin, LLC

"Mortgage Bonds are trading lower as we kick off the short holiday week. The Bond markets will close at 2 pm Eastern Time on Wednesday and will be closed all day Thursday for Christmas. Friday will be a regular trading session.

There are no economic reports due out today. However, later this afternoon, a record $38 Billion auction of 2-year Treasury Notes could influence prices, as the market absorbs additional supply.

Currently, Mortgage Bonds are trading in a wide range between resistance and support.  I  suggest locking, as prices are hovering near 50-year lows, which is an unprecedented opportunity.”

Joseph Greenspan

President

First Fidelity Home Mortgage of Wisconsin, LLC

"After all the big Fed news from earlier this week, Bonds began the day on the quiet side as they attempt to regain some of yesterday's losses.

Meanwhile, the Job market continues to struggle. The four-week average of new Jobless Claims reached the highest level since December 1982, while the four-week average of continuing Claims is the highest since January 1983.

I recommend taking advantage of the low rates. If anything changes, I will let you know."

Joseph Greenspan

President

First Fidelity Home Mortgage of Wisconsin, LLC

"The Fed lowered the Federal Funds Rate by .75% to a target range of 0% to .25%, and also lowered the Discount Rate by .75% to .50%. The statement that followed the cut said that the Fed was prepared to take aggressive steps to revive the sagging US economy.

In the past, Mortgage Bonds have reacted negatively to Fed cuts as fears of inflation come to life. But the Fed stated that inflation pressures have diminished appreciably and expects inflation to moderate further in coming quarters, hence the reason home loan rates are improving.

There are no economic reports due out today. For now, I recommend taking advantage of the low rates."

Joseph Greenspan

President

First Fidelity Home Mortgage of Wisconsin, LLC

"It's Fed Day! And that means the Fed will release its interest rate decision and policy statement later this afternoon. Currently, the Fed Funds Rate stands at 1%. But, indications are that the Fed will cut by .50% or .75%.

In other news today, Consumer Prices dropped more in November than any other month on record, due in large part to falling gas and energy prices. Based on these numbers, inflation is almost non-existent and could shift thinking towards fears of deflation. Also today, housing starts for November came in at their lowest level since records began in 1959, and building permits were reported at record lows.

So far this morning, Bonds have improved, but have struggled to gain too much ground. The tame inflation numbers and the dismal housing numbers should have sparked a better reaction in Bonds, but traders are cautious ahead of a Fed Rate cut, which historically hurts Bond prices. Therefore, I recommend floating for now, but be prepared to lock this tomorrow."

Joseph Greenspan\

President

First Fidelity Home Mortgage of Wisconsin, LLC