Most economic data is out. The Dow and S&P turned positive following stronger than expected manufacturing data from the New York Fed, even though the CPI report indicated consumer prices recorded their first annual decline since 1955 (deflationary pressure) and industrial production fell for a fifth straight month. Doesn't make much sense right? The strength in stocks may have more to do with technical trading patterns and market flows (short covering) vs. the market's interpretation of one set of localized economic data.
Treasury yields have been on the rise since stocks found unexpected optimism early in the session. Consequently, as MBS/TSY yield spread have tightened (bc TSY yields rising), market participants have looked to consolidate short term day trading profits and MBS prices have moved lower a few ticks. Although MBS buyer interests pick up when prices cheapen, traders will most likely wait for spreads to leak out a few bps before returning to the market (MBS will either need to sell off more than TSYs or TSYs will need to rally more than MBS). Translation: We need to wait and see if stock trader's sentiments have any conviction before getting nervous about further MBS deterioration...nonetheless be on alert if you are looking for that perfect time to lock.
Since 5pm "Going Out" Marks....
FN30_______________________________
FN 4.0 -------->>>> -0-02 to 100-05 from 100-07
FN 4.5 -------->>>> -0-02 to 101-31 from 102-01
FN 5.0 -------->>>> -0-02 to 103-07 from 103-09
FN 5.5 -------->>>> -0-01 to 104-03 from 104-04
FN 6.0 -------->>>> +0-00 to 104-26 from 104-26
GN30________________________________
GN 4.0 -------->>>> -0-02 to 100-12 from 100-14
GN 4.5 -------->>>> -0-02 to 102-07 from 102-09
GN 5.0 -------->>>> -0-03 to 103-26 from 103-29
GN 5.5 -------->>>> -0-01 to 104-12 from 104-13
GN 6.0 -------->>>> +0-00 to 104-25 from 104-25
Here is the FN 4.0 price action so far this morning....at the moment 100-05 is holding as an overhead resistance level
UST2YR Yield: +0.016 to 0.8750
UST3YR Yield: +0.013 to 1.2418
UST5YR Yield: +0.013 to 1.7417
UST10YR Yield: -0.004 to 2.7863
UST30YR Yield: +0.008 to 3.6669
MBA's Weekly Mortgage Applications
This morning the MBA reported, for the week ending April 10,2009, that mortgage application volume fell 11% from one week earlier. It should, however, be noted that the MBA does not provide a holiday adjustment for the Easter/Passover weekend, so that contributed to this week's decrease in application volume (but we all knew that already since most of us took some time off).
The Refinance Index decreased 10.9% and the Purchase Index decreased 11.3% after an 11.1% gain last week...so it was a zero sum game for purchase applications over the past two weeks.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.70% from 4.73%, with points increasing to 1.23 from 1.03 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
Since borrowers interest in obtaining a new mortgage skyrocketed following the Federal Reserve's announcement to lengthen the term of their Agency MBS Purchase Program and commence a new TSY Debt Purchase Program, it appears that the recent trend of borrower's increasing interest in new loans may have begun to burnout. This chart illustrates what looks like the foundation of a plateau in mortgage applications...
Have you taken all the apps that you can take? Are there still borrowers out there who can refinance? Yes, according to the April prepay report there are still candidates in 2005/06 vintages who should have enough equity to at least consider refinancing from their 6.0%/6.5% rates. I hate to say it but..MBS is once again near the top side of its trading range...based on the pricing behavior exhibited by lenders when MBS last reached these "all time highs"......... MORTGAGE RATES PROBABLY WONT GO MUCH LOWER!!!!
So if you are an eligible borrower and are still sitting on the fence....this is me telling you that, unless some magical fairy waves her wand over the lenders...you should probably consider committing in the near future. TAKE YOUR PROFITS WHILE YOU CAN!!! Yes..things could get better...but if history holds...this is as good as it gets!
And if you are wondering...no this is not a sales tactic...I am not an originator. I am purely interpreting a historical trend and communicating what will likely be the most advantageous strategy for you to follow.
If you are one of those borrowers who is having trouble qualifying you really need to be proactive about seeking out an educated originator who is willing to go to every extreme to ensure all your rescue options are exhausted. Only a handful of lenders are willing to risk offering the DU REFI PLUS program at this point and even if you go to a lender offering the program it will require hard work to make the "stars align" and get you closed in a timely fashion. But this program can help you, it may not be an easy process in the current mortgage environment, but the program has the potential to help lower your monthly obligations. You just need to find the right originator (may I suggest reading through our Forums for guidance?)
MBS Market Alerts
