Not much to recap from yesterday. Mortgage backed securities prices rallied during the first part of the day before giving back all gains after lunch. Lenders left rate sheets unchanged on the day with par still holding near the lows of 2010.
The economic calendar was empty today. We did have a couple Fed officials speaking today though.
Anytime Federal Reserve officials speak, market participants pay close attention to their biases in an effort to hear any hints regarding the future of monetary policy. Minneapolis Federal Reserve Bank President Naranyana Kocherlakota spoke to Allied Executives Business at the Economic Outlook Symposium in Minneapolis. Federal Reserve President Kocherlakota emphasized how uncertain the road to recovery really is, he also explained that the Fed must be very cautious about the timing of the withdrawal of accommodative monetary policy.
Interestingly enough, Kansas City Fed President Thomas Hoenig was on CNBC this morning, saying the exact opposite thing. He is the only voice His bias is against the rest of the Federal Reserve's current zero interest rate policy. He stated that slack policy invites risky financial behavior and often times leads to problems down the road. Hoenig was the only member of the Board to vote against keeping the Fed Funds Rate between 0 and 0.25% at the last FOMC meeting. Most economists and market watchers do not support Fed President Hoenig's calls for higher rates.
It was a very volatile day in the secondary mortgage market. Yesterday MBS prices rose in the morning and fell in the afternoon. Today the exact opposite happened. MBS prices fell at the open and recovered losses in the afternoon. A few lenders even repriced for the better.
If your lender has not repriced for the better, mortgage rates are higher compared to yesterday. If your lender did reprice for the better this afternoon, mortgage rates are about the same as yesterday (they were lower to start the day, the reprice brought us back to yesterday's levels.). The par 30 year conventional rate mortgage remains in the 4.75% to 5.00% 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 one point loan origination/discount/broker fee. You may elect to pay less in closing costs but you will have to accept a higher interest rate. This is a ideal option for homeowners not planning on keeping your home for more than a few years.
With mortgage rates still holding at the lows of the year, I continue to advise locking.