Mortgage Rate Watch

Short Term Direction of Mortgage Rates Dependent Upon Auctions and Stocks

Victor Burek — Mon, 08 Feb 2010 18:43:26 GMT

Who Dat!!!! Congratulations to New Orleans on a well played and exciting Super Bowl victory. Mortgage rate moved a few basis points lower on Friday following the Employment Situation Report . While we have seen scattered day over day streaks of improvements, mortgages rates have failed to fall lower than 4.75% in 2010. To remind readers, as mortgage-backed securities prices move higher in price lenders are able to pass along better rates. After what seemed like a steady flow of important economic data and market moving headline news last week, the data schedule slows down in the days ahead, but headline news is always a possibility. In terms of scheduled events, no economic reports are being released today or tomorrow. On Tuesday we have the first of three mortgage rate influential Treasury...(read more)

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How Did The Employment Report Affect Mortgage Rates?

Victor Burek — Fri, 05 Feb 2010 19:21:34 GMT

Mortgage rates improved a few basis points yesterday as panic set in on Wall Street. Headline news called attention to a developing crisis of confidence in the European Union where Greece, Spain, and Portugal all face ballooning budget deficits and rising government borrowing costs. Fear caused a global stock market sell off which led nervous investors to reallocate funds into what is considered to be the safest investment in the word, US Treasuries. This "flight to safety" into the bond market helped mortgage-backed securities prices move higher which allowed lenders to pass along slightly lower mortgage rates. While improvements were noted,many originators were expecting more aggressive loan pricing from lenders, but as has been the case over the past few weeks, 4.75% continues...(read more)

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Lenders Improve Mortgage Rates as Stocks Panic. Locking Ahead of Employment Report

Victor Burek — Thu, 04 Feb 2010 22:12:00 GMT

Mortgage rates extended their streak of moving sideways near the most aggressive levels of the year yesterday. Although prices of mortgage backed securities were moderately weaker at the end of the day, lenders were not forced to reprice for the worse, leaving rates unchanged at the end of the day but marginally worse than the previous day. All was generally quiet in the interest rate market....until today. First out this morning were Weekly Jobless Claims, released by the Department of Labor at 8:30am. This report gives us three measures on the number of Americans who filed for first time unemployment benefits in the previous week. Since our economy is driven by consumer spending, higher unemployment leads to less spending which is a negative for the stock market and generally supportive of...(read more)

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Mortgage Demand Picks Up Ahead of Expected Rise in Rates

Victor Burek — Wed, 03 Feb 2010 21:56:31 GMT

Mortgage rates held steady yesterday near what might turn out to be the most aggressive levels of 2010. Mortgage backed securities prices did not move too high or too low without quickly correcting, not much progress was made in any direction yesterday or for the last few weeks for that matter . Early this morning, the Mortgage Bankers Association released their weekly Mortgage Applications Index. The MBA survey covers over 50 percent of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. A rising trend of mortgage applications indicates an increase in home buying interest, a positive for the housing industry and economy as a whole. More home purchases can lead to more...(read more)

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Mortgage Rates Steady Near What Might Be The Best Levels of the Year

Victor Burek — Tue, 02 Feb 2010 17:51:23 GMT

Mortgage rates held steady yesterday despite a healthy rally in the stock market. Lenders were able to keep mortgage rate sheets mostly unchanged as prices of mortgage backed securities held to a tight range throughout the day. President Obama released his 2011 Budget yesterday morning. We were hoping it would address the ownership position of housing enterprises Fannie Mae and Freddie Mac, however they were not mentioned. What does this mean for mortgage rates? If the Federal Reserve carries on with their exit from the agency MBS market at the end of Q1 2010, which we expect to happen barring a huge shift in economic sentiment, mortgage rates will rise from current levels. This is one reason we have been more biased toward locking than floating lately. The lone economic report to hit news...(read more)

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Mortgage Rates Prepare for Busy Week of Econ Data

Victor Burek — Mon, 01 Feb 2010 18:33:09 GMT

Despite a much better than expected advance read on fourth quarter GDP (consensus was 4.5%, actual 5.7%), the week ended on Friday with mortgage rates near the best levels of the month. Usually, better than expected economic data causes stocks to move higher and bond yields increase. But that is not what happened. The lack of a logical reaction in the interest rate market implies investors are anticipating a slower read on GDP in 1Q 2010, especially after Q4 2009 numbers were boosted by less contraction as opposed to more growth ( READ MORE ). On top of that, this was first read on Q4 2009 GDP, there are still two revisions to come that many believe will adjust Q4 GDP to a level worse than originally reported. Mortgage rates ended the week with the most aggressive lenders offering 4.75% at...(read more)

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Mortgage Rates End Choppy Week Near Best Levels

Victor Burek — Fri, 29 Jan 2010 22:22:21 GMT

Mortgage rates ended last week at their best levels since early December. Then rates rose on Monday, gained back lost ground on Tuesday only to give back those improvements after the FOMC statement on Wednesday, weakness then extend over into Thursday. This left the par 30 year fixed mortgage rate in the 4.875 to 5.125 range. Today, all eyes were on the release of Advance 4th Quarter GDP. At 8:30 am the US Department of Commerce released the advance read on 4th quarter Gross Domestic Product. This is the first of three 4th Quarter GDP release, today’s report will be revised in February and March. GDP is the broadest measure of total economic activity and includes every sector of our economy. It is basically our economy’s score card. A rapidly growing economy usually leads to inflation...(read more)

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Mortgage Rates Move Higher Again. Stocks Influencing Lock/Float Decisions

Victor Burek — Thu, 28 Jan 2010 21:31:57 GMT

Mortgage rates rose after the release of the FOMC statement yesterday. Whiel the interest rate sell off wasn’t substantial, MBS prices declined enough to force lenders to reprice for the worse. Overall there were only small adjustements made to the FOMC statement. The vote on whether to raise or hold steady the Fed Fund rate was not unanimous though. Thomas Hoenig, the Kansas City Fed Bank President, voted to raise short term interest rates while all others voted to leave rates unchanged. He believes the current 0 to 0.25% range for the Fed Fund rate was no longer warranted due to an improving economy. He also believes that inflation is a bigger concern than many believe. To slow inflation Hoenig believes interest rates need to be moved higher. For more on the FOMC statement and President...(read more)

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Mortgage Rates Move Higher After FOMC Meeting

Victor Burek — Wed, 27 Jan 2010 22:33:00 GMT

Mortgage rates improved a few basis points yesterday. Lenders were somewhat subdued in passing along interest rate improvements though. This is a function of a few reasons. First, mortgage-backed securities prices have held to a tight range over the course of the week. The second reason is a bit more obvious, the FOMC meeting ended today at 2:15pm. This was a major market event, so it makes sense that lenders would be defensive ahead of a scheduled event that had the potential to move interest rates in either direction. Before getting to the impact of the FOMC on mortgage rates, allow me to recap the day's economic data releases. Early this morning, the Mortgage Bankers’ Association released their weekly applications index. The MBA survey covers over 50 percent of all US residential...(read more)

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Locking Loans Ahead of Treasury Auctions and FOMC Statement

Victor Burek — Tue, 26 Jan 2010 17:54:27 GMT

There isn’t too much to report from yesterday. After a weak open, prices of mortgage backed securities moved sideways before eventually closing the day where they began. While there were no reports of lenders repricing for the worse, mortgage rates did move higher compared to last Friday's levels. Today is day one of the Federal Open Market Committee’s two day meeting where our nation’s monetary policy is set. These meetings occur approximately every six weeks and are considered one the most influential events for all markets. At these meetings, the Fed sets the federal funds rate which serves as a benchmark for all other rates. Currently, the fed fund rate sits in a range of 0% to 0.25%, it is widely accepted that there will be no change to that rate. On day one, nothing...(read more)

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Mortgage Rates Rise Ahead of FOMC Meeting and Treasury Auctions

Victor Burek — Mon, 25 Jan 2010 20:52:50 GMT

For mortgage rate watchers and interest rate shoppers, last week was rewarding. Lenders were able to offer progressively lower mortgage rates as prices of mortgage backed securities moved higher and higher over the course of the week. By Friday lenders had passed along the best rates of 2010. Improvements to consumer borrowing costs were partially a function of weakness in the equities market. Stock selling was sparked by political headlines including the Massachusetts Senate election, the announcement of new bank reforms, and growing debate surrounding the renomination of Ben Bernanke, the Chairman of the Federal Reserve. All of these events combined to create a great deal of uncertainty in financial markets which forced investors to sell risky assets and re-allocate funds into risk free assets...(read more)

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Locking My Loans After a Week of Mortgage Rate Improvements

Victor Burek — Fri, 22 Jan 2010 20:44:09 GMT

Mortgage rates hit their lowest levels in over a month yesterday after mortgage backed securities prices rallied to new 2010 highs. These improvements were triggered by a stock sell off which forced investors to reallocate funds into less risky assets like US Treasuries. Panic in stock markets was prompted by a proposal from the Obama administration which limits the size of banks and their risk taking/profit making strategies. While details have yet to be provided, the stock market did not react well to this news. Bank stocks sold off rapidly as market participants scrambled to make sense of the regulatory proposal. This event turned out to be very supportive of interest rates. As MBS price gains held into the trading session close, many lenders reissued rate sheets which lowered consumer borrowing...(read more)

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Mortgage Rates Hit New 2010 Lows as Stocks Sell

Victor Burek — Thu, 21 Jan 2010 21:20:03 GMT

Yesterday, mortgage backed securities closed at their highest prices since early December which allowed lenders to offer the best mortgage rates seen in 2010. These improvements have extended over into today after some unexpected news from the Obama Administration. But first a recap of morning economic data… First to be released was weekly jobless claims. This report gives us several readings on the number of Americans who filed for unemployment benefits in the previous week: Initial claims totals the number of first time filers. Continued claims totals the number of Americans who continue to file for unemployment benefits due to an inability to find a new job. Extended benefits totals the number of Americans who are receiving emergency benefits beyond the traditional time allowed to...(read more)

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Mortgage Rates Move Lower. Favor Locking over Floating

Victor Burek — Wed, 20 Jan 2010 20:57:13 GMT

After making noticeable improvements toward the end of last week, mortgage rates failed to extend positive progress yesterday. After a weak open, mortgage backed securities prices traded in a narrow range for most of the day. Despite MBS prices moving lower at the open, lenders were still able to offer aggressive mortgage rates, they were actually at their most aggressive levels since early December. Economic data picked up today... First out was the Mortgage Bankers Association Mortgage Application Activity report. This MBA survey covers over 50 percent of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. A rising trend of mortgage applications indicates an increase...(read more)

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Mortgage Rates Steady at Aggressive Levels

Victor Burek — Tue, 19 Jan 2010 17:57:00 GMT

Mortgage rates improved last week after the Treasury Deparment completed debt auctions totaling $84 billion. On Friday, lenders improved rate sheets to their best levels all week (best in about a month really!). All US markets were closed yesterday in honor of Martin Luther King Jr. day. A few lenders issued rate sheets, they were unchanged from Friday. We had no major economic data releases this morning; however, Citigroup announced third quarter results matching expectations of a 0.33 cent loss per share but missing on total revenue. In total, Citigroup lost $7.6 billion mainly due to a pre-tax charge of $8 billion which repaid TARP bailout funds. At 1pm today the National Association of Home Builders will release their Housing Market Index. This survey gives the market a view into the sentiment...(read more)

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