Interest Rates…up, down or stable?

Development of the balance sheet of the US Fed...

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Interesting Insight from Weichert Financial’s “Market Monitor”

“We continue to witness the uptick in mortgage rates, as foreign investors divest from their holdings in mortgage backed securities, and banks/institutional players sell their holdings to book the gains from these purchases in the 2010 calendar year. We saw a very similar scenario take place at year end 2009, with global investors capitalizing on profits. In the first/second quarter of 2010, those very same sellers became buyers again, driving rates back downward for the remainder of the year. Many traders are wondering if we will see the very same phenomenon happen again in 2011.

The wild card will be the economy. With a growing/strong economy, investors will be more willing to invest in Equities as an alternative investment choice to Fixed Income. If the economy continues to remain stagnant, not so much, and Fixed Income will once again be attractive. We will continue to monitor through year end, but with 30 yrs in the 4’s, 15 yrs in the 3’s, and a 5/1 ARM at 2.99%, these are still very attractive levels. It not too late to capitalize.”

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