Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Rate markets started slightly better this morning with the 10 yr at 1.82% down 2 bp at 8:30; 30 yr MBSs at 8:30 +6 bp frm yesterday’s flat market. US stock indexes early this morning unchanged prior to the 9:30 open. Not much data today; the day’s focus is on the House where there is expected to be a vote today to extend the debt ceiling through mid-May. Republicans trying to eliminate the potential blame for holding the US hostage on the debt that Treasury is saying will run out of money in February without an increase in the limit Treasury can borrow. The House is expected to pass legislation to temporarily suspend the government’s $16.4 trillion borrowing limit until May 19. At that point, the measure would allow the nation’s borrowing authority to automatically be increased to accommodate the amount the U.S. Treasury borrowed during those three months. Within the bill the House and the Senate each must adopt a budget resolution for the next fiscal year by April 15. If not, the pay for members of the chamber that doesn’t act will be withheld and placed in an escrow account until they adopt one -- or, at the latest, until the end of the 113th Congress. The step back from the default fear has kept treasury rates from increasing, actually falling slightly. The Obama administration is welcoming the move in the House; in the Senate Harry Reid appears to be supportive of the bill. Mortgage applications increased 7.0% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 18, 2013. The Refinance Index increased 8% from the previous week. The seasonally adjusted Purchase Index increased 3% from one week earlier and was at its highest level since May of 2010, immediately following the expiration of the homebuyer tax credit. This increase in purchase applications was primarily for conventional loans, as the seasonally adjusted Conventional Purchase Index was at its highest level since October of 2009. The refinance share of mortgage activity was unchanged from the previous week at 82% of total applications. The adjustable-rate mortgage (ARM) share of activity increased to 4% of total applications. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.62% from 3.61%, with points increasing to 0.43 from 0.38 (including the origination fee) for 80% loans. The contract interest rate for 30-year fixed mortgages has increased for five of the last six weeks. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.85% from 3.88%, with points decreasing to 0.34 from 0.38 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.40% from 3.39%, with points decreasing to 0.53 from 0.58 (including the origination fee) for 80 percent LTV loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.87% from 2.88%, with points increasing to 0.39 from 0.27 (including the origination fee) for 80% loans. The average contract interest rate for 5/1 ARMs decreased to 2.61% from 2.66%, with points decreasing to 0.32 from 0.34 (including the origination fee) for 80% loans. EU update; U.K. jobless claims unexpectedly fell in December and a quarterly measure of unemployment also dropped. The Bank of Spain said that the nation’s recession deepened in the last quarter of 2012, with gross domestic product falling 0.6% from the previous three months. European Central Bank President Mario Draghi said yesterday the “darkest clouds” over the euro area have lifted due to decisive policy steps last year. UK Prime Minister David Cameron is moving to allow a referendum vote on whether the UK should stay in the EU or leave it. Describing British backing for the status quo as “wafer thin,” Cameron said today voters will have their say by the end of 2017, if he’s re-elected in two years; he is saying he wants the country to stay in the Union. At 9:00 the Nov FHFA home price index was expected to have increased 0.7%. The index is for purchases of single family homes only using data from Fannie and Freddie. The index as reported increased 0.6%; yr/yr +5.6% unchanged frm Oct. No immediate reaction to the report. Early activity in the stock market has the key indexes better after making 5 yr highs yesterday. At 9:30 the DJIA opened +49, NASDAQ +13, S&P +2. 10 yr at 9:30 1.82% -2 bp with 30 yr MBSs +11 bp frm yesterday’s close. The bond and mortgage markets continue to be well contained within narrow ranges. There has been little change in mortgage rates over the past three weeks. Technically there is still a slight bearish outlook as the economy improves; this morning testing its 20 day average again. The House vote scheduled for today to extend the debt ceiling through May 19th is helping the bond markets as investors are less concerned that the fighting in Congress is at least set aside for a few weeks.