Did you miss your cruise ship/ the big boat again?

Laura Jo Smith, the Mortgage Lending Manager at Superior Bank sent this email to me so I thought i would share it with my friends..

“Last week taught all those who think they can predict interest rates a lesson. Just when you think all the data would point to lower interest rates the rates jump ¼% at the end of the week giving back all the gains of the early part of the week. The lesson re-learned was from good ole freshmen economics and the supply & demand axiom that when demand for anything rises quickly, and there is not a corresponding rise in supply, the price will rise. With all the early week refinance activity, and new locks early in the week as rates continued to set new lows, all the mortgage companies hit the bond market all at once with new locks causing a temporary imbalance between the demand for funds and the supply. The spike in rates cut off much of this new demand and so the market began to regain the losses as it closed on Friday. This may be a pattern we see repeated in the weeks to come as demand increases when rates fall only to drive rates up by the increased demand, and then down again as the demand wanes. Good luck guessing in that market.

Posted at 11:00PM Aug 30, 2010 by Deborah O Thompson in Real Estate  |  Comments[0]