Mortgage Rates



Interest rate markets began the day about unchanged from yesterday; yesterday the 10 yr note yield declined 2 basis points to 1.94% and mortgage prices on the day +4/32 (.12 bp). At 9:00 this morning the Feb Case/Shiller 20 city home price index declined 0.8% frm January and yr/yr -3.5%, both in line with estimates and the smallest 12-month drop since February 2011. Stock indexes in pre-opening trade were up fractionally after falling 102 points on the DJIA yesterday. At 9:30 the DJIA opened +25, the 10 yr note -2/32 1.95% +0.5% and mortgage prices +1/32 (.03 bp). German 10-year bund yields rose three basis points to 1.67% after dropping to an all-time low of 1.633% yesterday.

Today the FOMC meeting begins to conclude tomorrow afternoon with the policy statement then Bernanke will hold a press conference. Six weeks ago at the last meeting (3/13) the Fed was a little more optimistic about the economic recovery than in past reports. Since then though Europe’s economy and China’s economy are weakening and in the US weekly claims and non-farm jobs suggest hiring is slowing from earlier this year. Now what is the Fed thinking? Most, including us, are not expecting anything about another easing move from the Fed, but Bernanke will use his influence to jaw-bone the possibility based on economic performance.

The EU’s plan for countries in the region to drastically cut spending in massive austerity moves may be back-firing. The demanded cuts put on Greece, now Spain and Italy; not to forget Ireland and Portugal, have caused the economic outlook to worsen sending Europe back into recession and adding concern that the cuts in spending may not be achieved increasing the possibility of sovereign defaults. The deterioration in Europe is further stressed with the French elections where Sarkozy was unable to get enough votes the first time around against his opponent that is against many of the plans agreed on between France and Germany. The overall reaction to Europe’s decline and China’s slowdown has driven US long term rates down as investors turn to safe investments. The US economic outlook is being thought weaker as a result of these global factors.

Three reports hit at 10:00 this morning; March new home sales were expected up 2.2% to 320K units (annualized), sales declined 7.1% BUT Feb sales were revised to +7.3% frm -1.6% and Jan sales were also revised higher. The median sales price $234,500. +6.3% yr/yr; inventory levels fell to 5.3 months, overall it was an encouraging report. The April consumer confidence index at 69.2 frm Feb revised to 69.5 frm 70.2; the expectations index jumped to 81.1, the present situation index at 51.4 the highest since Sept 2008. The Feb FHFA housing price index +0.3%, Jan revised to -0.5% frm unchanged, yr/yr prices up 0.4%.

The three data points at 10:000 boosted the stock markets and pushed bond and mortgage prices a little lower.

This afternoon Treasury auction $35B of 2 yr notes, we expect the auction will go OK but bidding will be closely scrutinized as recent auctions while not bad have lacked the strong bidding in Feb and January.


If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.