Wednesday, August 25, 2010

Crashing Mortgage Rates

4.00% on the 30 year.

3.50% on the 15 year.

3.375% on the 10 year.
Mchael Dunton Senior VP at Mt. Mckinley Bank emails:
Insane. Would you buy MBS paper at these rates? The setup here is so potentially ugly down the road.

1 comment:

  1. Answer: Because the Fed will buy them all in the end at above market prices. Just don't use margin.

    It looks like next month's T purchases will be greater than $18 B. Reason 1: No offsetting MBS settlements (there were $2.5 B in Aug). 2: Lower rates mean more prepayments.