US Stock markets are plummeting this morning, currently down 397 points (about 5%). After mass selling of everything, so it appears panic is back in the air and cash is king heavy selling took place in Asia (down around 10%) overnight and Europe (down around 7%) today. The sell-off in Stocks hasn't helped Mortgage Bonds, however, as prices have broken below key levels of support. Usually on days like these you see a flight to quality, meaning investors sell equities and buy bonds, treasuries and gold.

Some good news this morning comes in the form of Oil and existing home sales. Oil prices are down $4 to nearly $64 per barrel, despite an announcement that OPEC will cut oil production. And, in the housing market, existing home sales jumped 5.5% last month to a 13-month high, although this has not affected the market, according to the National Association of Realtors®.(Link to National Association of Realtors®.)

Lawrence Yun, chief economist for the Realtors, said a sales turnaround first seen in California was beginning to broaden to other regions of the country including Colorado, Kansas, Minnesota, Missouri and Rhode Island.

By region of the country, sales soared by 16.8 percent in the West and rose a more moderate 4.4 percent in the Midwest and 2.2 percent in the South. The only region of the country which saw a decline was the Northeast, where sales fell by 1.1 percent.

Analysts still believe that long term outlook for MBS’s is for lower rates. But late yesterday and this morning we have had a pretty big sell off in mortgage back securities which is driving rates higher, it seems the fundamentals are out the window.

Ian Bennett
Mortgage Banker