by Ben Morton All economic signs point towards rates going down.The stock market is down, weak economic growth (GDP), and consumer sentiment is down. Although these would indicate a break in interest rates, we saw rates increase by .125% this week. Why is this? Clearly we are in uncharted waters with the opposing forces…declining economy and the stimulus package(s). The traditional economic announcements don’t have near the impact they used to. This week the Fed Funds rate was not lowered as it doesn’t have much more room to go at 0-.25%. Furthermore, the majority of the mortgage backed securities that the Fed is buying are 30 Yr. 5.0% and 5.5% coupons. That is why we’re seeing rates between these 2 numbers. A small percentage of the bonds being purchased are 4.5%, this allows the Fed to continue the purchase programs through June if need be. To sum it up, this practice prolongs the ability to sustain rates around 5% for a longer period of time, as opposed to 4.5% for shorter period of time. For now, rates are as follows: CONFORMING 30 Yr Fixed 5.125%, 1 pt. 15 Yr Fixed 4.875%, 1 pt. JUMBO 7 Yr ARM 5.550, 1 pt. Note: The Austin Mortgage Rate Update is provided by Ben Morton. Great Austin Properties, LLC does not receive any monetary gain nor do we guarantee the rates quoted above. We provide this information to you to help keep you informed of the Austin market.