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Monday, September 8, 2008

Rate Watch: Float

Great news for the future solvency of Fannie Mae and Freddie Mac was announced yesterday. The Government is now guaranteeing all Mortage Bonds issued by Freddie and Fannie in the past and in the future! Because of solvency issues with the two largest insureres of Mortgage Loans in the United States (they insure over 60% of all loans!), this news has been viewed as huge stabalization within the Mortgage Market. Liquidity, Stability and Affordability in the Mortgage Markets is now guaranteed as the Government offers $200 Billion in Bond Guarantees. Mortgage prices have been very favorable today and on the technical side, a switch to watching the 5.50% Bond from (moving down from the 6.00% Bond) is immenent with the improvement in the market. I will recommend floating for now and will let you know if there is a change in direction within the market.