Twin Cities Market Activity June 2014

“The Skinny”

A Summary of Twin Cities Market Activity Narrated by David Arbit, Research Manager for the Minneapolis Area Association of REALTORS.

US Treasury to Sell off Mortgage Backed Securities

During the mortgage crisis, the US Department of the Treasury purchased approximately 144 billion dollars worth of mortgage backed securities to help stabalize the mortgage markets. Mortgage Backed Security prices dropped 50 basis points this morning on the news that the Treasury Department is going to systematically sell-off it’s holdings of MBS’s purchased in 2008 and 2009. It’s anticipated that the Treasury will sell approximately $10 billion per month, subject to market conditions. Stated reasons of why to sell now are due to the “stabilizing economy and market conditions”.

Traders are thinking that it could be due to US debt limit levels as well, but that has certainly not been a stated reason.
Just the anticipation of the added forthcoming supply pushed traders to a sell mode sending mortgage backed security pricing down & rates up and adds to the continued volatilty that we have seen over the past several weeks.

This will pressure mortgage rates up.  Why? because of supply and demand. Adding more securities to the market increases the supply an din order to “sell” the new mortgage backed securities they will need to offer a higher return to attract investors.

What does this mean for you? If you are considering a move, I would do it sooner than later. Rates are still below 5.0% and now is the time buy and to take advantage of these rates!

Mortgage Rates & Trends: Mortgage Blog

Next year is not likely to be a good one for the housing market.  The reasons for this are multifold.  In a post yesterday I discussed what I see as an inevitable decline in home values in the coming year.  In this post I want to discuss what I see as another 2011 inevitability: an increase in foreclosure activity.
According to data provider RealtyTrac, foreclosure activity was down in November.  There were 262,000 foreclosure notices issued, which is down 21 percent from the month prior and down 14 percent from the previous year.  In fact, this was the first time since February 2009 that foreclosure notices dropped below 300,000.  On the face of it, this appears to be a good thing.  In reality, the decrease can be directly attributed to foreclosure moratoriums issued by major lenders due to the incredibly sloppy paperwork that resulted in the whole robo-signing fiasco that is yet unresolved.  The decrease in foreclosure activity simply amounts to a stay of execution for many Americans who are in dire financial straights.