From Active Rain:
According to Tom Millon of the Capital Markets Cooperative, in his article entitled The Week Ahead in the Capital Markets--September 8. 2008, mortgage rates are positioned to possibly drop in the coming future. We have already seen an impact as of today in rates, despite the increase in the Treasury Bond Yield. This is because the spread in yield between mortgage rates/MBS rates and the 10 Year Treasury Bond has been at an unprecedented high. The expectation is that the spread between tresury yields and mortgage yields will be reduced by approximately 1/2 percent, which is significant. Treasury yields may rise in the meantime, lessening this impact. But rates should drop in the near future.
Secondly, the government is enacting the GSE Mortgage Backed Securities Purchase Program, which will aloow the government to purchase MBS'. How much and how much this will help is too early to tell.
This will be an interesting upcoming month in the secondary mortgage market.