Warren Buffett describes his investment philosophy as being fearful when everyone else is greedy and greedy when everyone is fearful. Today, fear abounds in the mortgage bonds market and that is driving mortgage rates higher.
Rampant fear is why I'm suggesting that borrowers float their mortgage rate. I had been advising borrowers to lock loans, until all hell broke loose, on March 6,2008. Investors are worried that the mortgage bonds they hold will be worthless. This market is a lot like the junk bond market of the late 80s. Those that panicked lost money; those that kept a cool head, profited.
Today a 30 year fixed rate loan is offered at 6.25%, up from 5.875%, and a 7 year ARM is at 6.125%, up from 4.875%.
Can you see how much panic there has been in less than a week?
I think the market will calm down and traders will pay attention to the economic figures. The Consumer Price Index is due out Friday and that should be the big market mover. Float your mortgage rates, for now. Keep alert and keep checking back.
Contact me at (858)-777-9751 with questions or apply for a mortgage online for a quick response.
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