Yesterday, mortgage backed securities (MBS) moved steadily higher throughout the day closing higher by about a .25 in discount.  As MBS move higher in price, consumer borrowing costs decline and mortgage rates improve.  To see a graph of yesterday’s action, CLICK HERE.   A couple lenders did reprice for the better but most held back the gains from their rate sheets.  So far this morning, MBS continue to move higher which should allow most lenders to pass along par 30 year conventional rate mortgages in the 4.625% to 4.875% range for the best qualified consumers.  Some lenders are still offering incentives for consumers with fico scores over 740 and loan to values under 60%, which will place par at 4.5%.

Today we do not get any major economic reports to move the markets.  We did get the release of a couple retail sales reports, ICSC-Goldman Store Sales and Redbook.  These reports are released weekly and measure sales at retail stores.  Both of these reports show retail sales on the decline, no shock there.  These reports are not market movers since this information is already known due to the release last week of the March Retail Sales report.   

We do get to hear from our Treasury Secretary Tim Geithner who will be testifying to Congress on the Troubled Asset Relief Program(TARP).  His testimony can move the markets.  If you would like to read a letter he wrote to the oversight committee, CLICK HERE.   We will be listening to his testimony and will get back to you with any relevant issues. 

Well, that’s it for the day.  On days with very limited data, we will get our direction by the stock market, treasuries and headline news items.  So far this morning, the stock market has opened in the negative and treasury yields are moving lower.  The benchmark 10 year Treasury note is currently trading at a yield of 2.78 which is helping MBS.    

Early reports from fellow mortgage professionals are showing par rates to be at 4.625% today.   

How quickly things can turn.  Since typing my blog, the stock market has reversed course and is now in positive territory and is currently up 50 points.  This is resulting in the flow of money leaving fixed income (MBS and Treasuries) and into the stock market.  Currently, MBS are down a little from closing levels yesterday but well off their highs of the day.   The benchmark 10 year Treasury has moved from its low of the day of 2.78 to currently trading at a yield of 2.83.  We have not sold off enough to receive reprices for the worse; however, if the stock market continues to improve it might very well be at the expense of MBS resulting in higher borrowing costs. 

For intraday mortgage market updates visit the MBS Commentary blog.