Yesterday the Fed cut their Funds Rate by 50 basis points (half a percent) to 3%. This moved a lot of investor money into the stock market instead of & out of the bond market (which is closely tied to the 30 mortgage rates). Late in the East coast trading afternoon, some changes in ratings for financial guaranty insurance subsidiaries caused stock sell off especially generating losses in the financial sector, which boosted bonds toward the end of yesterday.
MBIA Inc (a major bond insurer) reported a $2.3 billion loss for it’s fourth quarter due to all the mess with subprime mortgages. This announcement is causing investors to be wary and we’re still seeing a volatile marketplace. I’m getting emails currently showing about 20-25 basis points worse in mortgage rate pricing from this morning’s initial rates.
The good news for the moment? Estimates for the new jobs report coming out tomorrow are guessing 70,000 new jobs were created in January. The other good news? Things being what they are right now in financial markets, changes like this are happening in both directions every day and mortgage rates are still historically awesome and you should be able to get a deal today around 5.5% provided your variables are good. Don’t wait, we’re here for you if you’d like to see about getting a loan while they’re hot.