Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Treasuries started strong this morning but early trade in the MBS markets was flat with no change from yesterday at 8:30. Stock indexes weaker his morning with Europe’s markets down. Uncertainty over the Greek bailout is still effecting markets and the continued uncertainty over the fiscal cliff adding to investor concerns. Yesterday comments from Washington were not encouraging but there is still a month to go before the cliff edge. Various comments from people like Warren Buffett that going over the cliff won’t be a crisis is softening the fear factor. As long as Congress and this Administration can get a deal early in 2013, according to an increasing number of business leaders, it won’t cause another recession as many have forecast. The drama over the cliff will however keep investors from doing much. Increased taxes are likely in the end, the question on spending cuts is more likely to be difficult. Tax increase are coming, the only issue is who and what taxes will be increased. German 10 yr bund yield fell 5 basis points today as safety concerns increase over the Greek bailout and the US fiscal cliff negotiations that appear once again to be deadlocked with no progress. Yesterday Senate leader Harry Reid commented he was “disappointed” that no progress was occurring, at that moment the stock market rolled over and treasuries improved as increased safety drove money into treasuries and in turn improved MBS prices. In early trade today the 10 yr note rate at 1.61% was approaching the level that has recently capped any additional improvement in rates. President Obama is scheduled to meet more corporate leaders today; he has met with a number of business leaders recently, including small business leaders yesterday. Obama set to talk at 11:30 this morning. At 9:00 30 yr MBS prices up 9 bp, not much but still improving; the 10 yr note at 9:00 at 1.61% -3 bp. At 9:30 the DJIA opened -57, NASDAQ -17 S&P -8; 10 yr note 1.61% -3 bp and 30 yr MBSs +2 bp. The MBA composite index declined 0.9% last week; the purchase index continues to trend higher, up 3.0% for the second week in a row. In contrast, the refinance index is moving lower, down 2.0%. Yet refinancing activity remains very strong, making up 81% of total applications with purchase applications making up the remaining 19%. Mortgage rates remain extremely low, down 1 basis point in the week to 3.53% for the average 30-year loan for conforming mortgages ($417,500 or less). At 10:00 Oct new home sales, expected down 0.5% at 387K; sales declined 0.3% as reported but the decline in units is weaker than thought. Last month’s 389K units was revised to 369K so the decline of 0.3% looks better than actually it was given the decline in Sept sales frm the data originally released. On the rep[ort more selling in the stock market but not much change in the rate markets. At 1:00 Treasury auction $35B of 5 yr notes, it should get good demand, yesterday’s 2 yr was strong. At 2:00 the Fed will release its Beige Book the Fed’s detailed report on the economy in each of the 12 Fed districts.