Mortgage rates moved slightly higher yesterday but managed to weather the storm of better than expected economic data and  earnings reports. Today, mortgage-backed security prices are mostly unchanged and mortgage rates are a few basis points lower. However, compared to last week mortgage rates are about 0.25% higher.

Bank of America and GE released earnings this morning.  Bank of America had disappointing results last quarter with a larger than expected loss.  GE beat estimates on earnings per share but failed to match total revenue expectations.   The weaker than expected results moved stock futures much lower which helped the bond market avoid a continuation of recent selling.

The Federal Reserve released Industrial Production data today. This report gives us a look at how much factories, mines and utilities are producing.  Last month’s report indicated a large increase, this month economists  expected an increase of 0.2%.  The report showed that Industrial Production improved more than expected last month, increasing 0.7%. Additionally, last month’s numbers were revised higher from a gain of 0.8% to a gain of 1.2%! READ MND STORY

The final economic report of the week is a preliminary read on how the consumer is feeling.   The University of Michigan’s Consumer Survey Center questions 500 households each month on their personal financial condition and attitudes about the economy.  An optimistic consumer is much more likely to spend money while a pessimistic consumer is more likely to save.   Since our economy is driven by consumer spending, the stock market usually benefits with optimism while the bond market benefits with pessimism.  Today's preliminary read indicates consumers are losing some of the optimism they gained over the last few months.  Expectations called for a 74.0 reading following last month’s 73.5, but the actual report indicated a much worse than expected 69.4.  READ MND STORY

We did this last month and got some interesting responses. So we decided to do it again!  Here are some questions from the Consumer Sentiment Survey....

1.      Would you say you are better or worse off than a year ago?

a.      Better                   b. Same                c. Worse              d. Don't know

2.      A year from now, do you think you will be financially better or worse off than  right now?

a.      Better                   b. Same                c. Worse              d. Don't know

3.      On a scale of 1-5, how good or bad do you think the economy will do over the next 12 months? 

A response of "1" would be the worst, "3" would be mixed, "5" would be the best.

4.      What's your perception of business conditions NOW versus A YEAR AGO

a.      Better                   b. Same                c. Worse              d. Don't know

5.      How do you think business conditions will be a year from now?

a.      Better                   b. Same                c. Worse              d. Don't know

6.      During the next 12 months, do you think interest rates will ....

a.      Go up                   b. go down          c. stay the same                d. no opinion

7.      Over the next 12 months, how fast do you expect prices to rise or fall?

a.      Rise faster than normal                  b. Rise at normal pace     d. neither rise or decrease e. Decrease

If you just want to keep it short, your response in the comments section could be as simple as:

1. a

2. b

3. 2

4. a

5. c

6. b

7. a


Although there is talk of an extension, the first time home buyer tax credit is currently scheduled to expire in 45 days.  If you are wanting to take advantage of this government stimulus program, get your loan application submitted, even if you haven’t found a home yet.   Some lenders will underwrite your loan with a “to be determined” address.  This will help speed up your final approval once you find a home and ensure you qualify for the tax credit. One note, you will be unable to lock your interest rate until you have found a home.  Additionally, if you lock and change your mind on the original home for a different home, you will be required to do a new lock at the current market rate since the lock goes with the specific Rddress. 

Reports from fellow mortgage professionals indicate the par 30 yr fixed conventional mortgage rate remains in the 4.875% to 5.125% 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.  If you are considering a 15 year fixed rate, expect a par rate in the 4.375% to 4.625% range. 

I hope everyone has a great weekend.   Make sure you check out Matt and AQ's MBS Commentary blog.