Mortgage rates continue to hold steady in a range near two month lows. Despite some selling pressure after stronger than expected morning data yesterday, mortgage backed securities managed close near the best levels seen since early July. Although reprices for the better were not broad based, most mainstream lenders did pass along lower rates by days end.
Recently we have been using the term range bound quite often. To help you better understand what we mean...look around the room you are in right now. You have a ceiling over your head and a floor beneath your feet. Range bound implies prices are moving between a ceiling and a floor. Although prices have bounced around between this zone, seldom have they broken their boundaries. Currently, MBS are at the top of this zone. This implies it will be easier for prices to move lower rather than higher, which increases the probability that mortgage rates will not move any lower in the near future.
The only economic report to be released today came from the National Association of Realtors (NAR). Each month they release the Existing Home sales report. This data measures the number of existing homes in which a sale closed during the month. Recent reports have indicated that housing has found a bottom. This was the case again today as the data was MUCH better than anticipated. In fact, annual exisiting home sales are expected to reach a level not seen since July 2007. For more on this report click here.
As today is essentially "dataless", this report has had a profound effect on the marketplace. After the release of the data stock prices hit 2009 highs and MBS prices fell from their intraday highs. This decline took us just below the worst levels from yesterday.
Although MBS prices have fallen precipitously, reports from fellow mortgage professionals indicate that the par 30 year fixed conventional mortgage rate remains in the 4.875% to 5.125% range (for the most qualified consumers). In order 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 one point loan origination/discount/broker fee.
On a side note, a recent survey of senior loan officers with major banks have indicated that lender guidelines are getting tougher and tougher. I would like to hear from you on this subject. If you are a consumer, have you tried to apply and have been denied? If you are a mortgage professional, what is your opinion on the current underwriting standards of lenders? In my opinion, the pendulum has swung way too far making qualifying too difficult. Granted, it was way too easy from 2004 to 2006 but I feel the standards of underwriting have gone too far. And some of the conditions being asked for seem rather ridiculous.