Even though price action in the secondary market was choppy and economic reports were better than expected, conventional 30 year par mortgage rates held steady near 5.00% as prices of mortgage backed securities managed to end the week higher. The calendar is busy this week with Friday providing the most noteworthy event...the Employment Situation report.

Mortgage rates haven't moved much this week as prices of mortgage backed securities continue to bounce around a range. Yesterday's highlight was the Treasury Department's successful 5 year note auction. Demand for the record tying $39 billion issuance was above average, allowing the rates sector to maintain their recent range heading into the close.

Mortgage rates are holding steady even as stocks continue to make new 2009 highs. After some early morning selling pressure yesterday, prices of mortgage backed securities managed to regain much of the losses they suffered on Friday. So far this morning we've managed to hold onto about 2/3rds of those gains, weathering a storm of better than expected economic data and rallying stock markets. Our next hurdle: the 2 yr note auction at 1pm eastern.

Mortgage rates continue to hold steady in a range near two month lows. Despite some selling pressure after stronger than expected morning data yesterday, mortgage backed securities managed close near the best levels seen since early July. Although reprices for the better were not broad based, most mainstream lenders did pass along lower rates by days end.

Mortgage rates lost some ground after prices of mortgage backed securities moved lower following a stock market rebound yesterday. To remind readers, as MBS prices appreciate, lenders are able to pass along lower mortgage rates. As MBS prices fall, lenders are forced to raise mortgage rates.

Mortgage rates are inching lower as prices of mortgage backed securities continue to move higher today. To remind readers, mortgage rates are set by the trading of mortgage backed securities. As MBS prices increase lenders are able to offer lower mortgage rates. Contributing to move lower in rates this morning is strength in bonds (like MBS) as stock markets sell off. This weakness began overnight in Asia and Europe and carried over into US trading. Already this morning, investor demand for safer securities is helping MBS post healthy gains.

We had quite a volatile day yesterday. MBS prices moved to the lows of the day immediately following the 10 year treasury auction and then even lower after the Fed statement an hour later. This forced many lenders to reprice for the worse, pushing mortgage rates higher. However after market participants had time to review the Fed statement MBS prices moved higher. Since the gains occurred late in the day, lenders did not pass along the improvements which has allowed for improved rate sheets this morning.

After a brutal last week were mortgage rates moved .50% higher, mortgage backed securities managed to start this week in rally mode. To remind readers, as MBS rally or move higher in price, mortgage rates move lower. Many lenders offered new rate sheets later in the day lowering consumer borrowing costs as the rally continued to close. Before we can get too excited, I must also point out that the volume of trades was very low so I can’t say that we are seeing a reversal of the recent trend of higher rates but good news is good news. In markets such as this, we must remain very defensive as sentiment can change very quickly and rates will move higher at a much quicker pace than they will move lower. Market participants are still battling with the opposing views of economic recovery is here vs we are a long way from economic growth. This clashing of views adds volatility in the market place with each economic report supporting one view or the other.