MBS and U.S. Treasuries Benefit From Swiss Central-Bank Shocker – CA Mortgage Rates Reluctantly Follow Suit

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Blue Home Loans, Inc. comments on the recent mortgage rate movement reported by Mortgage News Daily and offers some insight for California homeowners and potential home buyers.

The day for U.S. finance markets started with an overnight shocker from the Swiss National Bank, which made the decision to scrap its euro exchange cap and lower interest rates. This move understandably caused a lot of volatility in financial markets across the world, and U.S. treasuries and mortgage-backed securities benefited from the subsequent rush towards “safe-haven” investments. California mortgage rates also improved today, but have not yet reflected the full extent of the improvements in MBS. California full-service mortgage company, Blue Home Loans, Inc., has been helping clients to gain the maximum amount of savings on their home loans for many years and now takes a look a the recent mortgage rate trends and gives some advice for those who have home loan plans for the near future.

The California mortgage company takes a look at the January 15th report from real estate news website, Mortgage News Daily, which says, “When global financial markets are convulsing with uncertainty and anticipation, where can you find a safe, liquid place to park your money? One of the best, and most frequently repeated answers to that question today was: US Treasuries. 5yr Notes were the biggest winner, but 10yr Notes weren't far behind, rallying nearly 15bps . As is normally the case during massive flights-to-safety, MBS lagged the move in Treasuries, but nonetheless were dragged up to their best closing levels in more than 20 months (Fannie 3.0s at 103-10!).”

The MND article explains, “Today's volatility was kicked off by a completely unexpected and intensely interesting move on the part of the Swiss National Bank. --- As it happened, this was really the only meaningful event of the day for bond markets. It caused such a massive amount of uncertainty and volatility that US Treasuries became one of the only no-brainer locations to stash cash until the volatility was sorted out. Simply put, Treasuries didn't even have to try today. A lot of the volatility has to do with the implications about next week's ECB Announcement. After tomorrow, it's a 3 day weekend and then only 2 trading days before that announcement.”

Blue Home Loans explains that while mortgage-backed securities were dragged up to their best closing levels in 20+ months, mortgage rates were even more reluctant to follow suit. Part of the reason for this slow reaction is that the surprising new factor comes at a time when trading levels have already been stretched to unexpected levels in a very short amount of time. Because of this, while some lenders are offering nicely improved rate sheets most are only slightly improved and some are even offering higher rates than yesterday.

However, the move on the part of the Swiss National Bank does seem to be an indicator that they believe the ECB will go ahead with announcing plans for a QE program, either in next week’s announcement or by the next scheduled ECB announcement. The California home loan company explains that this would likely lead to continued low rates for the foreseeable future. However, none of this is a sure thing at this moment, so those who do not want to gamble on unknowns would be justified in locking in today’s low home loan rates which are at or near the lowest levels seen since after the “Taper Tantrum” caused rates to drastically rise in mid-2013. Those who can tolerate more risk might be well rewarded, but those who choose to float should be especially careful and alert to any changes in the markets that affect mortgage interest rates.

California borrowers who want to be sure that they benefit from the best California mortgage rates in 2015 will find that they can count on the mortgage experts at Blue Home Loans, Inc. 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.

California Bureau of Real Estate -- BRE #01938557 NMLS #1162386

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Brandon Blue
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