Switching to 4.0% Coupon

This is great news.  When we look at interest rates, we track a GNMA mortgage bond.

Recently, we’ve been using the 4.5% coupon.  With rates dropping so rapidly, we’re switching over to the 4.0% coupon as that is more closely related to the security that lenders are using to set FHA interest rates.

Mortgage bonds are flat to open today.  It could get a little dicey as fears over the Dubai debacle are subsiding.  With the high quantity of securities bought during this recent flight to safety, we could have a situation where the FHA loan rate could correct pretty quickly.