Mortgage Rate Watch

Mortgage Rates Bottom Out. Lock'em If You Got'em

2009-11-20T15:31:00Z

While benchmark interest rates continue to chop around in a contained range, mortgage-backed securities have moved sideways, failing to make much progress in either direction. Although we have experience a few moments of added volatility, tight trading ranges have kept and generally "topped out" MBS prices have kept mortgage rates stable all week, near six month lows. There are no scheduled data releases today. Reports from fellow mortgage professionals indicate mortgage rates to be unchanged from yesterday. The par 30 year conventional rate mortgage continues to hold in the 4.625% to 4.875% range for well qualified consumers. To secure a par interest rate you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated...(read more)

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HVCC Petition Submitted; Mortgage Rates Hit Floor

2009-11-19T17:32:17Z

Trading action in the rates market yesterday was similiar to the previous session: early morning weakness, followed by a move higher in the lunch hour, which was then lost heading into the close. News and events were fairly positive for the fixed income sector which helped spark the move higher in price, however profit takers were quick to step in and temper gains. Sounds like a lot of back and forth with no real progress in either direction right? EXACTLY! This choppy price action illustrates a market that is "range trading", which is what we have been discussing since early summer. This morning the Department of Labor released the weekly unemployment claims report, aka jobless claims. This data totals the number of Americans who filed for first time unemployment benefits in the...(read more)

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Mortgage Rates Hold Near Six Month Lows. Still Locking Loans

2009-11-18T18:29:35Z

In a volatile session, mortgage rates ended yesterday's session unchanged as a small rally in benchmark Treasuries helped support the MBS market. Following weaker than expected economic data in the morning, rates rallied. However as profit taking took place later in the day, early session strength was lost and MBS prices returned to opening levels. Overall, even though prices moved about a relatively wide range, rates remained unchanged on the day. The Mortgage Bankers’ Association this morning released their weekly applications index. This data tracks the weekly change in the amount of mortgage applications at major lenders. An increasing trend is positive for the economy in two ways. First, more home purchases leads to more home construction and consumer spending as the home buyer...(read more)

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Mortgage Rates Marginally Lower. Would You Lock or Float?

2009-11-17T17:56:04Z

Benchmark Treasury prices and mortgage-backed security prices rallied yesterday. AQ described the inner dynamics of the trade strategy that led to rate improvements READ MORE . In terms of the headline news catalyst for the rally in bond markets, some fixed income friendly verbiage from Federal Reserve Chairman Ben Bernanke gave us a boost late yesterday morning. In a speech at the Economic Club of New York, Mr. Bernanke stated that the Federal Funds rate is likely to stay exceptionally low for an extended period of time. He also warned of a slow economic recovery due to continually tight credit conditions and high unemployment. READ MORE Despite the generally bearish (cautiously optimistic) tone from Mr. Bernanke, the stock market still posted triple digit gains. Typically a rally in equities...(read more)

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Mortgage Rates Hold Near Aggressive Levels. Still Advise Locking

2009-11-16T15:27:57Z

Over the past few month I have been using a very well defined strategy to gauge lock/float opportunities. The idea is to lock when mortgage backed securities approach their recent range's price highs, and float when MBS are near the bottom of their recent price range. This "play the range" strategy has worked very well for my clients, with many locking in near historically low 30 year fixed mortgage rates. On Friday, MBS closed at their best levels in several months which allowed lenders to issue aggressive rate sheets. In accordance with my strategy, I advised locking in rates on Friday. The week ahead is busy, so there will be plenty of motivation for movement in the rates market. The busy week of data began this morning with the release of the Retail Sales report. Since consumer...(read more)

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Mortgage Rates Inch Lower. Favor Locking Over Floating. Take Your Profits!

2009-11-13T18:24:50Z

It was a busy day in the rates market yesterday. Although several data releases needed to be digested, the main event was the 30 year bond auction. Recently, while demand for shorter maturity Treasury notes has proven stable in the "post-November 4 FOMC statement" environment, the market has forced yields higher in the long end of the yield curve. Specifically the benchmark 10yr note and the 30 year bond have taken a beating over the past two weeks. Yesterday was the first chance we had to really test market's appetite for longer dated debt investments, which have more of an influence over mortgage rates. Unfortunately, while specific buyers supported the bidding, overall demand was weak compared to previous auctions. Following the release of the auction results, MBS prices plummeted...(read more)

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Little Room For Mortgage Rates to Continue Improving

2009-11-12T17:45:15Z

In honor of Veteran’s Day, the fixed income market was closed yesterday. A few lenders did issue rate sheets, most were priced conservatively, which is a common strategy on bank holidays. After a slow start to the week, we finally got some economic data to digest this morning. First out was the Mortgage Bankers’ Association’s Weekly Application Index. This data tracks the weekly change in mortgage applications at major lenders. An increasing trend is positive for stocks since the purchase of a new home leads to many other purchases. Additionally, an increasing trend in refinances should also lead to more consumer spending as home owners refinance to lower mortgage rates and lower mortgage payments giving them more cash flow. The report indicated that purchase applications...(read more)

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Mortgage Rates Marginally Improved. To Pay or Not to Pay Points?

2009-11-10T17:24:00Z

While the dollar touched a 15 month low and stocks hit a fresh 13 month high yesterday, the bond market minded it's own business, quietly trading in a tight range, ending the session near the intraday price high/yield lows. This calm and collected recovery in benchmark rates helped prices of mortgage backed securities move slowly but steadily higher on the day. With the economic data calender having nothing new to offer, the Treasury market benefited from a very strong auction of 3 year Treasury notes. Following the auction, MBS prices rallied on, allowing a few lenders to reprice for the better by day's end. Like yesterday, today's econ calendar is data free, however, a few Fed officials are speaking which can always generate conversation in the marketplace. First, Atlanta Federal...(read more)

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Locking Higher Loan Amounts. Cautiously Floating Less Sensitive Files

2009-11-09T17:15:00Z

Despite benchmark Treasury rates moving higher last week, prices of mortgage-backed securities managed to hold their ground, allowing mortgage rates to maintain status quo in their recent range. To remind readers, as prices of mortgage-backed securities move higher, lenders are able to pass along lower mortgage rates. After the FOMC meeting and the Jobs market report, which indicated the unemployment rate broke the double digit barrier, mortgage rates were marginally improved last week. On Friday, President Obama signed an extension of the $8000 First Time Home Buyer tax credit through April 30th of 2010. The tax credit is also being offered to homeowners who have lived in their current home for at least five years and are seeking to relocate giving them up to a $6500 credit. The income limits...(read more)

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Float Bias Back as Mortgage Rates Hold Steady After Jobs Data

2009-11-06T15:43:59Z

Mortgage rates continued to hold steady yesterday as prices of mortgage backed securities slowly inched higher yesterday. AQ and MG were discussing the supply and demand dynamics of the MBS market yesterday, citing several reasons for the stable range being held by MBS coupons, even as benchmark 10 year Treasury rates held near recent highs. HERE is an explanation of the logic behind MBS stability. A few lenders who were pricing loans conservatively in the morning eventually repriced for the better by afternoon. Before we get into today’s data, I want to give a quick update on the First Time Home Buyer Tax credit. Two days ago the Senate passed a bill extending the credit and yesterday, yesterday the House of Representatives also passed the bill which in effect extends the tax credit...(read more)

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Mortgage Rates Hold in Range. Locking Still Favored Over Floating

2009-11-05T18:15:53Z

The Federal Reserve released their statement on monetary policy and economic outlook yesterday. Although there were some changes to the text of the statement, markets got what they were expecting. The FOMC held the Fed funds rate at its current level and gave a cautiously optimistic outlook on the economy. After some early morning weakness. prices of mortgage backed securities improved after Fed statement and closed basically unchanged on the day. Unfortunately, falling prices early in the session led some lenders to reprice for the worse. However, some, not all, lenders repriced for the better later in the day. If you would like to read more on the Fed statement, check out AQ’s analysis. READ MORE . I also recommend reading the MBS OPEN for an in-depth discussion on how the Fed's...(read more)

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Mortgage Rates Pressured Higher Ahead of FOMC Statement. Did You Lock?

2009-11-04T17:09:46Z

Mortgage rates ticked higher yesterday as prices of mortgage backed securities were pressured lower by a selloff in the long end of the Treasury yield curve. To remind readers, as prices of MBS and Treasuries fall, their yields or rate increase…price and yield have an inverse relationship. No major report or headline caused the moved lower, AQ and MG point out that it was a function of Friday's bond market rally being unwound before today's Treasury auction announcement and the FOMC meeting which was ignited by a "Build America Bond" issuance pricing in California. Their brains are complicated but we make a good team! Whatever the reason was, price losses held into the close and the majority of lenders repriced for the worse. This morning the Mortgage Bankers’...(read more)

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Floating is Risky Ahead of Major Market Events

2009-11-03T17:16:55Z

Yesterday, following a better than expected read on Manufacturing and Pending Home Sales, benchmark rates backed up and prices of mortgage-backed securities moved lower, forcing several lenders to reissue new rate sheets with lower prices, therefore increasing consumer borrowing costs. The economic calendar was very light today. The most significant report released was Factory Orders. This data shows the monthly change in the dollar amount of new orders for both durable and non durable goods. Basically, it lets market participants know how busy factories will be in the future as they work to fill the orders. In August, Factory orders in fell 0.8% following July’s 1.4% increase. For September, factory orders rose 0.9%. Economists surveyed were expecting a 1.0% increase. There was not much...(read more)

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Mortgage Rates in Aggressive Side of Range

2009-11-02T18:04:55Z

Last week ended on positive note for mortgage backed securities and mortgage rates. As stock indexes fell, market participants re-allocated portfolios from risky assets to safer investments, resulting in added demand for government AAA rated fixed income securities. The benchmark 10 yr Treasury note moved back under 3.40% and MBS closed near their best levels in the past few weeks. Most lenders repriced for the better. This morning we had a several economic reports hit the news wires. First out was a read on the manufacturing sector with the ISM Manufacturing Index. The Institute for Supply Management surveys more than 300 manufacturering executives across the country on the strength of business conditions. Readings above 50 indicate expansion while readings below 50 indicate contraction. Since...(read more)

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Mortgage Rates Back in the Range After Bad Day for Bonds

2009-10-30T15:09:47Z

Mortgage rates rose yesterday after a better than expected advance read on third quarter GDP sent benchmark yields higher early in the trading session. Making matters worse for the fixed income sector was a recovery rally in stocks and a 1pm Treasury auction. As explained in previous posts, added supply of Treasury debt can have negative effects on yields as traders look for any reason to force rates higher in an effort to earn greater returns. Its the old econ 101 principle: if supply is greater than demand, then prices must fall enough to entice demand. Well...when Treasury prices fall, yields rise, and so do mortgage rates. Yesterday the deck was stacked against the rates market...better than expected econ data, a Treasury auction, and rallying stocks! That's why mortgage rates moved...(read more)

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