Today is the anniversary of September 11th, 2001.  So I pause, as I hope you do, to take a moment to reflect.   My heart and my prayers go out to anyone who was directly affected by those attacks and lost friends and family members.

Despite a rally in stocks, mortgage backed securities managed to post nice gains yesterday after a stronger than expected  30 year bond auction.   It is not very common to see stocks and bonds both rally on the same day especially when stocks tested their best levels in over three months.    Several lenders did reprice for the better following the auction at 1pm as the gains in MBS price held to the end of the day.   To remind readers, as the price of MBS move higher, lenders are able to offer lower mortgage rates. 

The U.S. Department of Labor released the monthly Import and Export price report  this morning. This data measures the monthly change in the prices of products that our nation import and export.    Changes to the prices of these products are important to market participants as they provide a signal of inflationary pressures here and abroad.     The report shows that both import and export prices increased by more than expected.   The increase in import  prices was much higher due to a sharp rise in oil prices last month.   When excluding oil, import prices only posted a modest gain.   Historically, higher prices for goods and services applies pressure on mortgage rates to increase, but given the currently low level of concern over inflation, it's no surprise that we're not seeing an impact on MBS.  To read more, click here.

The final report of the week was the Reuter’s/University of Michigan’s Consumer Sentiment index.   This is a survey of 500 households each month on their personal financial conditions and attitudes about the economy.  In general, the higher the reading, the better the indication for the stock market.  But in keeping with today's theme, yet another report that would normally be good for stocks not only had none of the normal positive effects, but even led to decreases in stock averages.  The reasons for this are somewhat complex, but one of the core concepts is the notion that stocks would have needed the data to be even better than it was in order to move higher from the multi-month highs achieved yesterday.  A much higher volume of trading in stocks occurred at levels just slightly below current levels, suggesting that economic indicator data would have to be extremely bullish to rally into even higher levels.  

Forgetting the effect of the consumer sentiment report on markets for a moment,  I'd like to hear from you!   In fact, we are going to have our own informal sentiment survey using actual questions from the official report.  In the comments section below, you can simply provide your answers to the questions below, or you're also welcome to expound on your reasoning behind those responses.  Away we go...

1.      Would you say you are better or worse off than a year ago?

a.      Better                   b. Same                c. Worse              d. Don't know

2.      A year from now, do you think you will be financially better or worse off than  right now?

a.      Better                   b. Same                c. Worse              d. Don't know

3.      On a scale of 1-5, how good or bad do you think the economy will do over the next 12 months?  A response of "1" would be the worst, "3" would be mixed, "5" would be the best.

4.      What's your perception of business conditions NOW versus A YEAR AGO

a.      Better                   b. Same                c. Worse              d. Don't know

5.      How do you think business conditions will be a year from now?

a.      Better                   b. Same                c. Worse              d. Don't know

6.      During the next 12 months, do you think interest rates will ....

a.      Go up                   b. go down          c. stay the same                d. no opinion

7.      Over the next 12 months, how fast do you expect prices to rise or fall?

a.      Rise faster than normal                  b. Rise at normal pace     d. neither rise or decrease

e.      Decrease

If you just want to keep it short, your response in the comments section could be as simple as:

1. a

2. b

3. 2

4. a

5. c

6. b

7. a

Either way, I'd love to get your take!

Reports from fellow mortgage professionals indicate that the par 30 year conventional rate mortgage remains in the 4.75% to 5.00% range for the best qualified consumers.  In order to secure a par interest rate on a 30 year conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs associated with the loan including one point loan origination/discount/broker fee.  If you are looking to secure a 15 year fixed rate conventional mortgage, you should expect a rate between 4.25% to 4.50%.    When securing a 15 year fixed rate mortgage, you only need a 620 FICO score to qualify for the best rate.