8/27/07 Market Snapshot
The gap between Mortgage Backed Securities (MBS) and the 10 yr. treasury yield has narrowed over the past week, with prices for mortgage backed securities improving. This is positive for the mortgage markets as the Conforming 30 yr. fixed rate hit it’s lowest level since May. Focus continues to be on the Feds as market watchers wait to see how the Fed will respond to the continued credit crisis. Expectations have been that the Feds may reduce the Fed Funds rate prior to the next FOMC meeting; however, the positive New Home Sales and Existing Home Sales numbers may cause the Feds to hold off on losing the rates.