Following a somewhat disappointing 30 year bond auction yesterday, prices of mortgage backed securities plummeted and mortgage rates moved higher as lenders repriced for the worse.
The economic calendar, like the previous four days of the week, is light today with only one report being released, International Trade numbers. Trade balance data reports the difference between the monetary value of a country's exports and imports. A positive balance, or trade surplus, means exports exceed imports and illustrates that a country's economy is globally competitive. A negative balance of trade is known as a trade deficit or trade gap. A globally competitive economy creates more jobs for Americans because US companies must work to satisfy several sources of demand, from domestic and foreign consumers. Greater production translates into faster growth of local economies and a stronger consumer balance sheet, ultimately leading to increased corporate profits. However, an over dependence on foreign demand for US goods and services implies the domestic economy is vulnerable to foreign economic disruptions.
Today's release showed that the US trade deficit unexpectedly improved last month, falling to -$30.7billion from a revised $-31.9 billion shortfall in July. The improvement in our trade numbers was due to both exports rising and imports declining. READ MND STORY
Prices of mortgage backed securities are considerably lower today. Many lenders have already repriced for the worse. Reports from fellow mortgage professionals indicate that par mortgage rates are priced between 4.625% to 5.000% for the best qualified consumers. If you are seeking a 15 year fixed rate, you should expect a par rate in the 4.375% to 4.625% range. To secure a par interest rate you must have a FICO credit score of 740 or higher(620 for the 15 yr fixed), a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee.
The economic calendar does pick up next week with some significant reports. Monday, fixed income markets are recommended to be closed by SIFMA in observance of Columbus Day. Wednesday brings us the first high impact report with the release of Retail Sales, Thursday we get a read on inflation with the consumer price index and on Friday Consumer Sentiment and Industrial Production data will be released.
Mortgage rates are holding near their lowest levels since May. With a long weekend ahead, I will continue to caution clients and readers about floating. Many events can transpire over the holiday weekend which could dramatically affect lender rate sheets. As I have stated many times, mortgage rates move higher much faster than they move lower. Additionally, there is not muchto gain by floating as rates are already within a .125% to .250% of historic lows.
Hope everyone has a wonderful 3 day weekend!