VIDEO: Want a car for 2010, but don’t have much money? Here is Ford’s answer:

A few years ago my 80-something year old Mom talked herself out of a speeding ticket by telling the young officer that she had “to get there before she forgot where she was going”. Where does the market think rates are going? The futures market is pricing in a 78% chance that the Fed keeps rates somewhere between 0% and .25% through mid-March. So although overnight rates between banks have a very limited correlation with 30-yr mortgage rates, the odds of mortgage rates going sky-high between now and then are small.

In fact, relative to the risk-free Treasury rates, mortgages have been on a tear for the past week. They have been “tightening”, which means that their rates are moving slightly closer to Treasury rates, which has many puzzled. Yes, origination volumes are down, and the Fed has been in buying, but some analysts believe that accounts that have sold mortgages in the recent past, without actually owning them, may be buying back their trades, i.e. “evening out their short basis positions”.

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(There will be no commentary tomorrow due to the holiday.)

Rob