Moore Mortgage Solutions

    The bond market was trading higher in the early part of the day but they are losing ground as the day progresses.

    Some interesting bit of news...yesterday I told you that several of the investment companies had reported good earnings. Today, Morgan Stanley reported profits above the market expectations. Does this mean that the collapse of Bear Stearns which dealt heavily in sub-prime mortgages is an isolated case? I’m not an economist but from my view, I sure hope so but only time can tell.

    The other news that is driving this good bond market is the Office of Federal House Enterprise Oversight (OFHEO) has changed Fannie Mae and Freddie Mac’s special capital restrictions. Fannie Mae and Freddie Mac though public companies are still regulated by the Federal government and in turn have to follow the restrictions placed on them by the Federal government.

    The restriction or guideline that was lifted was the special capital restriction. This will allow Fannie and Freddie to now buy more mortgage bonds which will pump $200 Billion into the mortgage market.

    Again, remember, that even with this good news, historically, after a Fed Fund cut, the bond market reaction is normally negative so interest rates may go up. And with lenders are still a bit jittery, this may and can increase interest rates mid-day.

    In the meantime, I am available to help you decipher the market conditions and help you make informed decisions.

    Until next time, make every day an inspired day!

Betsy Moore

betsy@mooremortgagesolutions.com

206-331-2749