Rates back down pheww!

Rates reached a high point last week of around 5.75 but have now relaxed by about half a point. So how can this volatility be explained and will rates stay at these historic lows?

The Federal Reserve has been flooding the mortgage market with money by purchasing billions of dollars' worth of home loans, which is what drove rates down this winter and spring. But the Treasury Department has started to borrow the mind blowing amounts of money needed to finance the record federal budget deficit, which is projected to reach $1.84 trillion this fiscal year, quadrupling last year's record $454.8 billion deficit.
This drove up the cost of all types of long-term debt, including mortgages, despite the Fed's best effort to keep rates low.

Rates started to go back down on Thursday 6/11.
The latest sell-off in Treasury bonds may have peaked, as a steep jump in yields finally has lured buyers off the sidelines.
That could end the upward pressure on mortgage rates, atleast for the time being.
Bonds are rallying today, driving interest rates lower, after the Treasury sold $11 billion in 30-year securities at a yield of 4.72% -- the highest auction rate in nearly two years but well below the 4.8% predicted by bond dealers in a survey by Bloomberg News.
"Something seems to have changed here" in terms of the market's mentality, said Charles Comiskey, head of Treasury trading at HSBC Securities in New York. "The price action is telling you" that rates have reached at least a short-term high, he said.
http://latimesblogs.latimes.com/money_co/

Here are today's rates at Primestar:

30 year fixed
Rate 5.25%
APR 5.371%
Details

15 year fixed
Rate 4.75%
APR 4.958%
Details


FHA
Rate 5.375%
APR 5.505%
Details

5 yr ARM
Rate 4.25%
APR 4.375%
Details