Remember the song â€śStuck in the Middle With Youâ€ť by Stealerâ€™s Wheel? It was background music for a particularly gruesome scene in the Quentin Tarantino movie, Reservoir Dogs.
Well, I donâ€™t know why I came here tonight
I got a feelinâ€™ that something ainâ€™t right
Iâ€™m so scared in case I fall off my chair
And Iâ€™m wonderinâ€™ how Iâ€™ll get down those stairs
Clowns to the left of me, jokers to the right
Here am I stuck in the middle with you
Wall Street bond traders are singing that tune and itâ€™s bouncing mortgage rates all over the place. Theyâ€™re scared because they feel that â€śsomethinâ€™ ainâ€™t rightâ€ť with the underlying loans held by Fannie and Freddie. Still, the US Treasury Secretary has pretty much guaranteed that the government will back Fannie Mae and Freddie Mac should the dung hit the blades.
While the treasury securities market has been somewhat stable these past few weeks, mortgage-backed securities are bouncing all over. Some days they act like treasuries and the spread narrows. Other days, they act like junk bonds and the spread widens. If you listened to my â€śdog on a leashâ€ť analogy, imagine a rabid animal running away from a scared owner one day and a docile pet running and cuddling with him the next.
Like the song, says, weâ€™re â€śstuck in the middleâ€ť which means, in my mind, weâ€™ll see mortgage rates rise a bit, to the 6.5% level, then drop to the 6.0% level. We still havenâ€™t seen the full effect of the Russian invasion to Georgia.
Weâ€™re locking loans that are closing within 10 days with an eye towards locking late August closings some time next week (when mortgage rates come back down).
Mortgage rates for August 1, 2008. Loan amounts up to $417,000:
3/1 ARM 5.500%
5/1 ARM 5.750%
7/1 ARM 5.875%
10/1 ARM 6.250%
30 Yr Fixed 6.375%
All rates offered to the borrower with 1 point cost. Rate quotes assume a purchase transaction with a 20% down payment, 720 credit score, and full income qualification. Rates are subject to fluctuation. Custom rate quotes and rate lock advice are available by calling (858) 777-9751.
MORTGAGE RATE TREND:
Next 7 days: Slightly Higher
Next 30 days: Neutral
Next 3 months: Neutral