Illinois Mortgage Rates and News

It was the Martin Luther King holiday Monday and the markets and banks were closed. My company was also closed for the observance, but I had some work to catch up so I put in a half day. As I said the markets were closed, so I didn’t obsessively check the mortgage bond market as I often do. The day played out quietly. An uneventful day. Maybe it was the calm before the storm.

Later that night I heard that there was turmoil in the foreign markets. The stock markets throughout Europe and Asia were selling off in a reaction to the problems here in the US of A. Maybe the catalyst was Bernanke’s acknowledgement that we were in danger of a recession, or maybe it was a reaction to President Bush’s stimulus package. Whatever it was it was trouble. We live in a global economy now. What happens in China is quickly felt in California, and what happens in Washington is felt around the world.

Tuesday morning the Fed cut the discount rate by ¾ of a point – a huge amount, and the timing, one week before the Fed meeting, added impact, and maybe a whiff of panic. Even after the cut, the stock market opened with big losses. At one point during the day stocks were off by 500 points, before recovering somewhat. It makes you wonder, what would have happened if the Fed had sat it out and waited for their meeting next week before dropping the rates? If that had been the case, we’d be talking about Black Tuesday, now.

Mortgage rates don’t always correlate with changes in the Fed rates. The Fed controls short term rates, and mortgage interest rates move up and down based on the trade in mortgage backed securities. It’s often the case that the Fed lowers the discount rate and mortgage bonds sell off, pushing interest rates higher. Not so yesterday. Mortgage bonds shot higher and mortgage rates dropped like a stone. Suddenly we were in a hot refinance market.

This morning the trend continued. The stock market continued to fall and mortgage rates dropped to the lowest point in years. I was quoting rates today in the low 5s! The year started out in the low 6s, so this is nothing short of extraordinary. But one lesson I’ve learned over the years, is that if you have a good situation, you should take advantage of it, because you don’t know how long it will last. The stock market changed direction late in the afternoon and ended up erasing its losses with the Dow gaining nearly 300 points. Money rushed out of mortgage bonds, and interest rates moved up sharply.

The sad part of this is, most people didn’t lock into the low, low rates. I signed up a fair amount of my past clients for refinances today, but many of them decided not to lock, figuring the rates would drop even lower. This still may happen. There was some good news coming out of Wall Street today, but I would bet we still have some more problems ahead. If we have the chance again, I would encourage people to jump on it.

As I’ve written before, this has been an extremely volatile market, and I expect the volatility to continue. There is an old Chinese proverb, or curse, which states, May you live in interesting times. We surely do.

Illinois Mortgage rates and News

Peter Thompson is illinois Mortgage Broker



Contact illinois Mortgage Company Today !

Tags: Fed, Illinois mortgage rates, interest rate cut, market commentary

Contact Illinois Mortgage Company Today.

Looking for Mortgage Chicago il ? get Best Advice from Illinois Mortgage Broker

We Offers Illinois Home Mortgage Loans with best mortgage rates

Are you Looking for First Time Home Buyers Loan ? Find Free Tips and Advice here

How to update yourself with Current Chicago Mortgage Rates ? The Answer is here.

Find the Maximum FHA Loan Amount in Your Area Here illinois Fha Loans