We analyze Pasadena mortgage rates by examining the mortgage-backed securities market
and its reaction to economic data and events. Today, the Federal Reserve cut
the Fed Funds rate to an historical low of 1%:

The Fed funds rate target is now 1%,
the lowest level in more than four years. In announcing its decision, the
Federal Open Market Committee cited a drop in spending by consumers and
businesses, and predicted that consumption
may slow further due to tighter lending standards.

"The pace of economic activity appears to have slowed markedly," the FOMC
said in a statement, "owing importantly to a decline in consumer expenditures."

Why's the economy in the tank? You just aren't spending enough money, Joe
the Plumber. Of course, you can't borrow any either so you're hesitant about
spending. Hence, the Fed cut in rate. Normally, a Fed cut should be followed
by a RISE in mortgage rates but it looks like the mortgage-backed securities
market anticipated the cut a week ago.


Let's take a look the crystal ball (market chart):

See what's happening here? Two weeks ago, we had a six day BIG drop, which
caused rates to rise from 5.875% to 6.5%. That drop was followed by a 5 day
rally, which brought rates back down to 5.875%. Then, we had a six day BIG
drop, driving Pasadena mortgage rates back up to 6.5% (today)...

...and I think the market overreacted which means I think we'll see
lower mortgage rates into the beginning of November

This is the kind of volatility we've come to expect. Pasadena mortgage rates should
drop to 6.25%, pause, then drop again to the 6% level or below. No guarantees
but November closings should get a peek at 6% or better rates soon.