Not too often do we see a MBS rally on Friday, but it is happening today. Currently MBS are up .75 basis points which has resulted in most lenders repricing for the better. Fellow mortgage professionals are seeing improvements to price but it appears that lenders are not passing along all the gains. Quite often lenders are more conservative on their rate sheets on Friday hedging against any unknown events taking place over the weekend.

The theme of the week continues. Mortgage backed securities were again unable to hold onto early morning gains following a less than expected Durable Goods orders report. A very disappointing Treasury auction is to blame for the turnaround which moved MBS much lower on the day which sparked reprices for the worse from most lenders; however, by day’s end MBS did crawl their way back closing at the same level at which they opened. This late day rebound allowed some lenders to reprice for the better bringing rates back to opening morning levels. As a reminder, today is day 1 of the new Truth in Lending Amendment that I wrote about on Tuesday. Parts of this amendment are good in my opinion, but it will result in some delays in closing loans. Make sure you allow for this delay by locking your loan for an adequate amount of time.

Reports from fellow mortgage professionals are indicating that mortgage rates are improved this morning. The par 30 year conventional rate mortgage is in the 5.00% to 5.25% range for the best qualified consumers. In order to qualify you must have a FICO credit score of 740 or higher, a loan to value of 80% or less and pay all closing costs including 1 point loan origination/discount/broker fee. You may elect to take a higher interest rate with reduced costs. For consumers electing to access home equity, you should expect either a higher interest rate or increased costs.

In what has become a common occurrence of late, mortgage rates failed to hold below 5%. Following a sizeable rally earlier in the week, mortgage backed securities prices fell nearly a full point yesterday. Consequently lenders were forced to reprice for the worse multiple times and mortgage rates moved higher. By day's end the par 30 year fixed rate mortgage had moved o 5.25% after reaching 4.875% on Wednesday.

Mortgage backed securities and treasuries went on quite a rally yesterday following Ben Bernanke’s first day of testimony on Capitol Hill. After opening to the downside, the fixed income sector started to gain momentum during Mr. Bernanke’s testimony as he gave details on the Fed's expectations for a slow economic recovery. Mr. Bernanke suggested the economy is bottoming out but that it will take some time before stable economic growth is achieved. All lenders did reprice for the better with some passing along multiple price improvements as the rally continued to official close. By day’s end we had several lenders offering 4.875% as the par rate for the best qualified consumers.

Last week proved to be tough for mortgage backed securities. Many mortgage professionals and consumers alike cheered as rates opened Monday at 4.875%, the first time below 5% in over a month. However, that same crowd was booing as the week progressed as Friday saw rates open at 5.25%. It seems that investor sentiment has shifted yet again back to a quicker economic recovery scenario. Driving the change in sentiment were several companies from Bank of America to Google that reported better than expected earnings and a couple economic reports that came in better than expected. This shift is pulling money out of the safety of fixed income and into the riskier but potentially higher returning stock market. Throughout the upcoming week we still have some other key earnings reports with companies from Wells Fargo to Coca Cola yet to report. Strong earnings reports can have the potential to continue the current sentiment of a quick economic recovery which will make it difficult for MBS to post any gains which could result in lower mortgage rates. Overnight, stock markets around the globe posted strong gains which continue to apply pressure on fixed income. At the open this morning, MBS continued their recent trend of moving lower in price which moves rates higher, but have since stabilized near Friday’s last levels.

Mortgage rates took another step higher yesterday following a 3% rally in the stock market. Tame inflation and “not as bad” industrial production numbers have resparked the green shoots theory of a quick economic recovery. Market participants, not wanting to miss out on the rally, quickly sold their fixed income investments to move their money into the higher risk but higher return equity markets. In total, mortgage backed securities moved lower in price (as price moves lower, rates move higher) by 75 basis points which forced all lenders to reprice for the worse with some issuing a couple reprices as the losses snowballed into close. Losing much more was MBS’s closest relative, the benchmark 10 year note, which sold off and moved to a higher yield of 3.63. Just a few days ago, the 10 year note was trading under 3.30 in yield. After mortgage rates briefly touched 4.875% the other day, they have quickly turned and by day’s end yesterday par was sitting at 5.25%

After spending the majority of the session in a stable range yesterday, prices of mortgage backed securities lost their steadiness and ticked lower heading into the close forcing most lenders to re-price for the worse, increasing mortgage rates. The bond market sell off was a factor of the stock market moving higher as traders set up for better than expected Goldman Sachs earnings. This morning those expectations were confirmed as Goldman reported Q2 diluted earnings per share of $4.93, easily beating forecasts. Later in the week JP Morgan Chase, Bank of America, and Citi will report earnings, look for the market to buy the rumor, and sell the news...meaning earnings reports will likely be priced into the market before they are released which will make for some illogical price movements following earnings posts.