Rates Drop After Yellen Speech; Underwriting as Loose as It’ll Get?

Rates Drop After Yellen Speech; Underwriting as Loose as It’ll Get?

Mortgage rates moved decisively lower today, following a speech from Fed Chair Janet Yellen. While she accomplished it in several ways, Yellen's overarching message was that the Fed is in no hurry to raise rates. Keep in mind, the Fed Funds Rate is not the same as mortgage rates. In fact, the two can move in opposite directions at times. In general though, when the Fed is perceived as providing more accommodation (via low rates or various bond buying programs), it's good news for all sorts of financial markets, including the market for mortgage-backed-securities (MBS) that ultimately dictate mortgage rates. In other words, easy Fed policy is a rising tide that lifts most boats . Stocks and bonds received a big boost, to be sure (MBS are part of the bond market). In fact, the MBS gains were