Tuesday 7/29 .. Good Monday Followed By A Bad Tuesday

George Jetson said it best: "Get me off this crazy thing!"

The recent dramatic "ups and downs" in MBS (mortgage backed security) pricing probably have many of you singing the same tune.  Today just adds to the drama.

• The Case Shiller Home Price Index fell to 16.9% down year over year.
• Although this report doesn't tend to have a major impact on rates, it's never a positive thing when the asset (homes) that secures the other asset (mortgage debt) that backs MBS, is declining in value.
  
• Merrill Lynch announced a huge sale of their Collateralized debt obligations which they are selling at a discount.  This is in effect a write down of 8.5 billion dollars.
• Although bad financial news can sometimes benefit rates, when the reason for the negativity is a company's mortgage related holdings AND when the rest of the market is up, it's actually hurting rates this morning.
  
• Consumer confidence had its first gain since December
• This is not good for Mortgage rates, mainly because it IS good for stocks.
  
• Bonds of all kinds (including MBS) are very reactive to stocks today, and dramatically lower oil prices are fueling a stock rally.  Bonds don't like it, so mortgages are becoming more expensive today.
• All in all, the same loan today is costing .25 to .375 more than yesterday.  This equates to roughly .125% interest rate.
  
• QUICK LOCK GUIDE: Depends on Time Frame.
• if you are closing very soon, floating could be too risky, although it is more likely than not we will see gains some time in the next two weeks.