For its last move in an action-filled year, the Federal Reserve announced it will begin buying its pledged $500 billion in mortgage-backed securities next month.For home buyers and mortgage rate shoppers, the timing couldn't be better. Because December 31 is one of Wall Street's most thinly-traded days of the year, low volume is exaggerating the announcement's impact on mortgage markets. Mortgage rates are lower this morning. However, you may not have much time to act.  Few mortgage lenders permit after-hours rate locking and bond markets close at 2:00 PM ET for the holiday.  If ...

Mortgage markets are like any other market -- in order for goods to change hands, a buyer and a seller must first reach an agreement to "trade" at a specific price point.  In general, the more buyers and sellers there are for a particular item, the easier it is to find that "fair value" and make the deal.  An abundant number of buyers and sellers often creates a liquid market in which assets -- in this case, mortgage bonds -- can be sold rapidly with minimal loss. This week, though -- with so many traders on vacation -- the "liquid market" has gone illiquid.  The treasury ...

In a week defined by low volume and lack of conviction, mortgage markets idled ahead of the holiday last week.  Friday's post-holiday action was even slower.After falling for two consecutive weeks, mortgage rates held flat last week. It's somewhat surprising that mortgage rates didn't rise considering the flow of negative economic news last week: Joblessness appears to be worsening Consumer spending sputtered The U.S. dollar is showing weakness Lately, each of these elements has played a role in mortgage rate movement but it's the last bullet point that could throw home ...

In late-November, the Federal Reserve pledged $600 billion to buy mortgage-backed securities.  The announcement drove down mortgage rates and started the Refi Boom.Then, the Federal Reserve made a second series of statements after its scheduled meeting last Tuesday, causing mortgage rates to plunge again.  This started the Refi Boom's second wave. Because of the surge in refinance activity, mortgage lenders are "backed up"; initial file reviews are taking up to 12 business days in some cases.  Typically, this process takes 2 days. Underwriting delays are problem for refinancing ...

Mortgage markets improved last week for the second week in row.  After the Federal Reserve said it would use "all available tools" to stimulate the economy, traders responded by driving mortgage rates to 50-year lows.It didn't last long, however.  After bottoming out early-Wednesday morning, mortgage rates trended higher all the way into Friday's closing.  It was the third time in 2008 that a sharp mortgage rate drop lasted less than one full day of trading. Many Americans took advantage of the historically-low mortgage rates, locking in new home loans below 5 percent.  And, in ...

During the holiday season, retailers bombard shoppers with at-the-register offers to "open a charge card and save 15%". It's an immediate money-saver, but for Americans in the market for a new home loan, taking advantage of the in-store savings could be a long-term loser. This is because new credit card applications are damaging to credit scores.  According to myFICO.com, "new credit" accounts for 10 percent of a credit score; recent applications may signal weakness in a borrower's profile. Meanwhile, conforming mortgage lenders make rate adjustments for low credit scoring ...

When it comes to mortgage rates, sometimes it's better to "act now".On Tuesday, mortgage rates fell to their lowest levels in 4 years. It happened because the Fed said it would "employ all available tools" to resuscitate the economy. On Wednesday, however, the markets had second thoughts. After considering the long-term implications of a near-zero percent Fed Funds Rate and the cumulative cost of government intervention to-date, suddenly, traders grew fearful that U.S. government action would devalue the dollar and lead to inflation -- the enemy of low mortgage rates. As a result, ...

The Federal Open Market Committee voted to cut the Fed Funds Rate by at least three-quarters percent today.  The benchmark rate now rests in a range of 0.000-0.250 percent.In its press release, the FOMC identified three key economic sectors in which activity has weakened since October. The FOMC noted that: The U.S. job market is deteriorating Consumer spending levels are falling Business investment is contracting nationwide The Fed intends its rate cut to provide stimulate to each of these areas. In addition, the voting members of the FOMC singled out inflation as ...