Last week ended on a sour note for mortgage rate watchers. Weakness stemmed from the Treasury Department's scheduled announcement which laid out the terms of this week’s auctions (debt offering). This combined with the fact that it was a Friday afternoon, the data calendar was empty, and interest rates had done well enough throughout the course of the week to warrant some profit taking resulted in higher benchmark yields, lower MBS prices. Consequently lenders increased mortgage rates up to 0.125% on Friday morning.
Here is a look at what will impact mortgage rates in the week ahead. For more, read the MND STORY.
No economic events
- Existing Home Sales. Many economists believe housing must fully stabilize and begin to improve before the overall economy can really gain recovery momentum. This makes tracking home sales data of much more importance (potentially high impacting)
- Treasury auctions $44billion of 2 year notes (medium impact)
- Mortgage Bankers’ Association’s Weekly Application Index(low impact)
- Durable Goods Orders, reflects new orders placed with domestic manufacturers for immediate and future delivery of factory goods. Basically this report tells us how busy factories will be in the months ahead as they look to fill new orders (medium to high impact)
- New Home Sales. See comments above on housing (medium to high impact)
- $42 billion of 5 year notes to be auctioned (medium to high impact)
- Weekly Jobless Claims (medium impact)
- $32 billion of 7 year notes to be auctioned(medium to high impact)
- Gross Domestic Product (GDP). The broadest measure of total economic activity and includes every sector of the economy(medium to high impact). This is the final reading for fourth quarter growth.
- Consumer Sentiment (medium impact)
It was a very slow day in the mortgage market. Mortgage-backed security prices opened lower which forced several lenders to publish mortgage rates higher than they were set on Friday. However, modest improvements in benchmark Treasury yields helped MBS prices recover from intra-day price lows. This allowed some lenders to republish rates for the better after the lunch hour.
Reports from fellow mortgage professionals now indicate lender rate sheets to be improved from Friday. The par 30 year conventional rate mortgage does remain in the 4.875% to 5.125% range for well qualified consumers. After the reprices for the better there are a few lenders offering 4.75%. 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 upfront costs but you will have to accept a higher interest rate. This is a good strategy for home owners not planning on keeping the current home for more than 3 years.
On Friday I stated “I would than recommend floating over the weekend as I feel you should be able to get that same rate Monday.” Well, we are seeing slightly better rates sheets this morning, and I am going to continue to advice floating unless you can lock at 4.75% today. If your lender increased rates late last week and is yet to bring them back down, float today. However, if your lender is offering 4.75% and you are within 30 days of closing and funding, I would recommend you lock.