The secondary mortgage market went on quite a ride yesterday! Following a weaker than expected 5 year Treasury note auction, market participants hurriedly sold their fixed income investments ahead of the FOMC statement.  This led to MBS falling below the recent range and a few lender reprices for the worse.  However, following the release of the Fed statement, Treasuries rallied, the dollar recovered losses, and stocks sold off.  When all was said and done MBS managed to close the day near the upper end of the current trading range, allowing lenders to reprice for the better, keeping mortgage rates in the same stable range they've in over the last few weeks.  

This morning the U.S. Department of Labor released weekly jobless claims data which totals the number of Americans who filed for first time unemployment benefits in the prior week. The report indicated that the number of Americans filing for unemployment insurance continues to move lower. For the week ending September 19th, first time claims fell from a revised 551,000 last week  to 530,000.  Continuing claims, which totals the number of Americans who continue to file for benefits due to a lack of finding a new job, declined to 6.14 million from 6.23 million in the prior week.   Initial claims are clearly on a downward trend but continuing claims findings still point to a weak labor market. MND story.

The National Association of Realtors gaves us a read on the housing market with the release of their Existing Home Sales report.  This data totals the number of existing homes, not new construction, in which a sale closed during the prior month.  Recent reports on housing, whether new homes sales or existing home sales, have shown that the housing market appears to be on the rebound.   July’s existing home sales posted the largest monthly gain since 1999!   With interest rates near historic lows, government incentives for first time home buyers and very affordable home prices have all helped to spark the surge in home sales. 

Today's report shows that existing home sales unexpectedly fell last month by almost 3% to a pace of 5.1 million sales per year.  This is well below economists’ expectations of 5.35 million sales per year.  Immediately following the data, stocks turned lower while mortgage-backs continue to hold near the topside of the trading range.

With the expiration of the first time home buyer tax credit quickly approaching and the end of the MBS purchase program set to expire by the end of quarter one 2010, many believe that the housing sector will turn negative without this government support.  What is your opinion?  Do you think consumers will still buy without the tax credit?  Are low home prices enough to stimulate people to buy?  

At 1pm the U.S. Department of Treasury will auction $29 billion 7 year notes. With the Fed statement behind us and Japan back to work, hopefully today’s 7 year note auction gets better results than yesterday's 5yr note auction.  Strong demand for our nation’s debt is one of the factors that have helped keep mortgage rates near historic low levels.  Matt and AQ will cover the auction results shortly after it is completed on the MBS Commentary blog. 

Early reports from fellow mortgage professionals are indicating that the par 30 year conventional rate mortgage has improved to the 4.75% to 5.00% range for the best qualified consumers.  In order to secure a par 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.  If your FICO score is less than 740, you can still secure a par interest rate but you will be required to pay additional fees due to the Loan Level Price Adjustments started by Fannie Mae and Freddie Mac late last year.  If you want to check out these fees, click here.

If you are still floating your interest rate, consider pulling the trigger today on your lock.  I am advising locking for a couple reasons.  First, Friday’s in general are not friendly to the mortgage market.  Secondly, MBS are at the top of the trading range that has held steady for over a month.  MBS have been unable to break this ceiling and each time they approach and are unable to break through increases the chance of a move lower.  Today’s rate sheets are as good as they have been since early this summer so now appears to be a good day to take advantage of the improvement in rates and lock in your gains.   Keep in mind, mortgage rates will move higher much quicker than they will move lower.