San Diego, CA (PRWEB) December 23, 2014
The lack of market participation common to this holiday week resulted in exaggerated movement in bond markets which pushed California mortgage rates significantly higher today. Blue Home Loans, Inc., a full service California mortgage company that has been helping home loan borrowers to benefit from the maximum savings on their homes for many years, takes a look at the factors surrounding the recent rate movement and gives some insight into what this means for those with home loan plans in the near future.
The company takes a look at the report from real estate news website, Mortgage News Daily, posted this December 23rd. This article states, “Mortgage rates moved decisively higher today, fueled primarily by the lack of market participation common to this holiday week. Light staffing levels don't always mean rates will rise, but such moves are one of the risks when fewer traders are around. Here's how it works. Mortgage rates are based on mortgage-backed-securities (MBS), themselves a part of the broader bond market. The most universal benchmark for "the bond market" is the 10yr US Treasury. If it's moving significantly, MBS will almost always be following to some extent. Treasuries were indeed moving significantly today, but it wasn't necessarily due to the strong GDP reading. That's an important distinction because strong economic data normally does push rates higher.”
The MND article notes that while GDP may have been one ingredient to today’s volatility, one of the biggest reasons for the significant movement was the lack of participation in markets due to the holiday week. The article explains that when there are many traders working, there is a better chance that some sort of balance will be maintained (with about an even amount of traders buying and selling) while fewer participants means that it just takes a few traders to upset this balance. The MND article also says,
“To make matters worse, algorithmic trading programs have a more prominent role on weeks like this (humans leave, robots stay) and their primary function is to jump on trends in motion. In other words, an algorithm could be programmed to sell bonds if it looks like a big selling spree is happening based on a certain level being reached. That selling in turn pushes rates higher still, potentially hitting the target level for another algorithmic trading program. It doesn't take long for snowballs to form in such conditions, and that's exactly what happened today.”
As a result, MND reports that California mortgage rates are now 0.04% higher today than yesterday, with the most prevalently quoted rate for 30yr fixed loans for top-tier borrowers nationwide now back at 4.0%. Blue Home Loans notes that, all things considered, today’s rates are not really that bad. They are still in the lower range for rates this year, and while it is disappointing that rates have not continued to go lower, this week has little influence on what rate trends will look like in the following weeks when traders get back to work. There is a chance that rates could bounce back, or at least level out a bit more, and those who have not yet started a loan application may still find that better rates are to be had in what remains of this year, or early next year.
California borrowers who want to be sure that they benefit from the best California mortgage rates will find that they can count on the mortgage experts at Blue Home Loans to find them the best rates and mortgage programs for their unique financial situation and home loan goals. The Blue Home Loans website states, “We make finding a loan simple because we have virtually every loan program available, regardless of the type of mortgage you are looking for. Whether you are dealing with bad credit, foreclosure, bankruptcy, or low credit scores, we can help you. It only takes us five minutes to find the right program that fits your needs."
For more information on how Blue Home Loans can help California home loan borrowers get approved for their home purchase loan or refinance quickly, please visit BlueHomeLoans.com or call 1-888-929-BLUE (2583) to speak with an experienced mortgage professional.
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