Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com US stock index futures trading early this morning were a little soft, in Europe the key stock markets were lower on concerns of increased weakness in China’s economy. China car sales unexpectedly shrank for the first time in eight months, adding to previous reports that its economy is slowing. Yesterday Alcoa reported earnings; the CEO saying the slowing Chinese growth will cut demand for aluminum. Adding to pressure for equity markets today; The International Monetary Fund said European banks may need to sell as much as $4.5 trillion in assets through 2013 if policy makers fall short of pledges to stem the fiscal crisis, up 18 percent from its April estimate. Still no actual movement with Spain’s debt issues. While the European Central Bank’s plan to purchase bonds of debt-burdened countries has pushed down bond yields, officials are waiting for a bailout request from Spain before putting the program into action. Early activity in the bond and mortgage markets this morning had prices lower and yields a little higher. At 9:00 the 10 yr note yield at 1.74% +3 bp, is the highest Sept 24th, MBS prices at 9:00 -31 bp frm yesterday’s close. There isn’t much news out there today, just the same stuff; Europe, China, the fiscal cliff approaching, nothing new in any of that. The bond market does not look good from a technical perspective, unless support increases we expect more selling that will test the 10 yr note’s 200 day average at 1.79%. The 200 day has been tested twice before and in both instances it held and the 10 yr rate declined. Remember the Sept employment report last Friday? No one in the markets does anymore. No political salvos, no mention one way or the other on the markets or from pundits and media. When data is so far off estimates it doesn’t hold water for very long. Mortgage applications decreased 1.4% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 5, 2012. The Refinance Index decreased 2% from the previous week. The seasonally adjusted Purchase Index increased 3% from one week earlier. The unadjusted Purchase was 12% higher than the same week one year ago. The refinance share of mortgage activity remained unchanged at 83% from the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 3.9% of total applications, matching the lowest level since December 2009. The government share of purchase applications was unchanged from last week at 35.5%, the lowest level since the beginning of the series. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.56% from 3.53%, with points increasing to 0.39 from 0.35 (including the origination fee) for 80% loans. The 30 year contract rate increased for the first time after declining for six consecutive weeks. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.74 percent, the lowest rate in the history of the survey, from 3.82 percent, with points increasing to 0.40 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.34%, the lowest rate in the history of the survey, from 3.37%, with points increasing to 0.71 from 0.36 (including the origination fee) for 80% loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.88%, the lowest rate in the history of the survey, from 2.90%, with points increasing to 0.40 from 0.27 (including the origination fee) for 80% loans. The average contract interest rate for 5/1 ARMs increased to 2.60% from 2.59%, with points increasing to 0.36 from 0.34 (including the origination fee) for 80% loans. At 9:30 the DJIA opened -24, NASDAQ and S&P -1. The 10 yr note yield 1.74% +3 b; 30 yr MBS price -26 bp frm yesterday’s close. At 10:00 August wholesale inventories, expected +0.4%; inventories increased 0.5% with sales up 0.9%. Two months in a row that inventories have increased. A little bounce in the stock market on the report. At 1:00 Treasury will auction $21B of 10 yr notes, yesterday’s 3 yr note saw the highest demand on record. The demand for the 10 yr will influence the way the 10 trades after the auction, if demand is strong the softness in the note this morning will likely improve and take MBS prices higher from present levels. At 2:00 the Fed’s beige Book, the staff’s detailed report on the economy from the 12 districts. Also at 2:00 Treasury will report the Sept budget data, the outlook is for a flat reading (no deficit, no surplus), and it will end the 2012 fiscal year with the total deficit in the year.