Mortgage Rates have dropped! The time is now.

1. What happened yesterday?What happened yesterday was shock to everyone in the mortgage and real estate business.  Yesterday we had the biggest drop in 30 year interest rates since the 1980's.  Early morning trading of "Mortgage Backed Securities" (which are truly what affects mortgage rates) had their biggest gain of the year.  Some of you are probably asking yourselves didn't he just say rates went down?  Yes I did, mortgage rates move in the opposite direction of Securities.

2. What caused it?

2 Major reasons for the rally.  (1) The Federal Government agreed to buy $600 Billion dollars worth of "Mortgage Backed Securities" (MBS from now on it's just too much to type).  This gives more liquidity to the market, before this purchase there were too many sellers and not enough buyers - causing prices to remain low.(2) The Third Quarter "Gross Domestic Product" numbers were revised lower from -0.3 to -5, a huge change that is very friendly news to MBS's because it is considered "ANTI-INFLATIONARY".  This revision drastically lowers the fears of inflation increasing out of control and increases consumer confidence.  (Signaling we may be coming out of this economic funk earlier than many economist expected)

3. What does it mean for you?  If you are a current home owner it means you may have the opportunity to save lots of money by refinancing.  If you are in the market to purchase a home it means your dollar will go a heck of a lot further with the lower interest rates.  For example on Monday the typical 30 year fixed rate was 6.25%, yesterday that typical 30 year fixed rate had fallen to 5.5% (take a look at the example below with a loan amount of $200,000)   

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