Don't Sell Those Ginnie Maes

Posted by: Chris Palmeri on August 29, 2008

If you haven’t already discovered it HSH Associates runs a great Web site with lots of free data for checking the latest mortgage rates. One of the things I keep hearing from Realtors and home builders is that rates are still low. That’s true if you’re comparing them to the 20% prime rate of 1980. Today’s rate of around 6.3% for a 30 year fixed rate mortgage is actually high when compared with other income investments. A 10-year Treasury bond yields 3.8% for example.

interest rates.jpg


HSH analyst Keith Gumbinger says his firm went back and looked at the spread between 30 year mortgage rates and Treasury securities going back to 1986 and found a spread larger than today in only 32 of the more than 1,100 weeks. Those weeks were mostly back in 1986 and 1987. What that tells us is that investors are more than willing to buy safer government bonds today and less interested in riskier mortgage securities.

“Mortgage buyers are just on strike right now,” Gumbinger says. He figures if mortgage rates reflected a more normal spread to Treasury bonds, a home loan would cost more like 5.5% today.

Since my Mom keeps asking me what she should do with her beaten-up Fannie Mae and Ginnie Mae mortgage securities I asked Gumbinger the same. Don’t sell, he said. “Take your yield, be happy,” he said. “They make a very attractive investment right now.”

Reader Comments

ballbuster

August 29, 2008 12:49 PM

Dear Chris,
This is your mommy reminding you to practice your math, especially your percentages and drink your milk. They're both good for you. As to those Fannie Mae and Ginnie Mae securities, do you remember your nagging me to buy them? Now, with the imminent collapse of Fannie Mae and Freddie Mac unless Uncle Sam bailing them out, I'm scare to death of anything having to do with "Mae." As I always tell you, don't write anything that I wouldn't be proud of and be careful when talking with a stranger who talk fast with numbers because you're not good with math. You know what? I'm so proud that you've grown up to be my honest sweet little boy. With all my love, your mommy. Oh, yes, don't forget to write!

shezters

September 30, 2008 1:02 PM

We all want affordable housing. There are numerous government programs designed to provide low-cost rental and ownership properties to people in all walks of life.
http://www.mysunsetmortgage.com

Wrobbel

December 6, 2008 8:59 AM

DbpHjf0 Todo Acerca Del Ayuno http://p.turughozji.com/mo Eres Tu Mi Mama http://p.quijevjet.com/kw Speckeled http://o.turughozji.com/fa Hoenig Pokemon http://o.turughozji.com/fl Wrobbel http://b.turughozji.com/gl Store In Englan 3 Tier Serving http://f.turughozji.com/ho Bulgar Lock Seattle http://k.krarektiot.com/oh Festival In Montmartre http://i.quijevjet.com/dy Testim Treatment Women http://f.cemharyeuc.com/fh Scott Niswonger Yacht http://a.turughozji.com/hu Software Audio Dj Download http://c.quijevjet.com/gd Fortino's Total Home http://g.turughozji.com/bu Australian Nhmrc Skin Cancer Excision Guidelines http://b.ussoshsug.com/h Flightcase Modifications http://g.ussoshsug.com/jd What Gorilla http://g.cemharyeuc.com/ad Sexy Dude http://n.krarektiot.com/nq Soap Opera Event Houston Texas 2008 http://a.krarektiot.com/u Frank Mosebach http://a.ussoshsug.com/ij Gertrud Dressler http://f.quijevjet.com/hw Virtualcenter Database Support http://k.cemharyeuc.com/no House For Sale Goodyear Az http://k.turughozji.com/dg Eastpoint Construction Cocoa Fl http://m.quijevjet.com/ln Sicma Jointers http://b.quijevjet.com/ab Sunshine Ski Banff http://e.quijevjet.com/jo Precede Proceed http://k.krarektiot.com/oq Richard Belzer Education http://d.ussoshsug.com/d Jankowski Mike Uk http://h.quijevjet.com/mc Bee Vore http://f.turughozji.com/dq

Post a comment

 

About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

BW Mall - Sponsored Links

Buy a link now!