Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Monday, December 13, 2010
Started lower again today; the 10 yr note overnight it 3.39% +7 bp from Friday's close, a little improvement by 9:00, at 3.36%. Mortgage prices at 9:00 down 6/32 (.18 bp) frm Friday's close. Looks more and more likely that the 10 yr may eventually drive to 3.50%. The exit from fixed income investments at those low yields is not over although we believe the near term remains excessively overdone. Still looking for a bounce but it is clear now that to see that it is going to take some kind of disappointment in the economic data being reported this week, meanwhile the trend is firmly higher for rates and it is not appropriate to bet on when a bounce will occur.
No economic releases today but the rest of the week has a lot to consider. Today the FOMC meeting begins with the statement coming tomorrow afternoon at 2:15. No supply this week from Treasury; today the Fed is scheduled to buy Treasuries dated 06/30/16 - 11/30/17. China did not increase interest rates as many were fearful they would. Inflation fears are one of the reasons we are seeing rates increase, China is making efforts to slow their inflation rate which is now at 6.0%, that and the Fed's desire to get the US inflation higher is dealing a blow to US rates. Inflation fears and the increasingly better economic outlook with tax cuts, payroll tax cuts, tuition credits and the extension of emergency unemployment benefits are combining to paint a smiley face on the economic future. A huge leap of faith, nevertheless it is what investors are increasingly expecting. The Senate is sure to pass the bill put together by Obama and Republicans, the House however is fighting it with many Democrats resisting the plan because it keeps the tax cuts for "the wealthy". Over the weekend the House was decorating the Tree, and not the National Christmas Tree, adding pork to the bill to bribe some of the dissenters. Subsidies for ethanol, wind farms and a few other ornaments; it isn't possible for Congress to pass a bill on its merits without hanging pork on it.
This Week's Economic Calendar:
Tuesday;
8:30 am Nov PPI (+0.5%, ex food and energy +0.2%)
Nov retail sales (+0.5%, ex auto sales +0.6%)
10:00 am Oct business inventories (+1.1%)
2:15 pm FOMC policy statement
Wednesday;
7:00 am weekly MBA mortgage applications
8:30 am Nov CPI (+0.2%, ex food and energy +0.1%)
Dec NY Empire State manufacturing index (+3.0 frm -11.14 in Nov)
9:15 am Nov industrial production (+0.3%)
Nov capacity utilization (75.0% frm 74.8%)
10:00 am Dec NAHB housing market index (17 frm 16 in Nov)
Thursday;
8:30 am weekly jobless claims (+4K to 425K; continuing claims 4.078 mil frm 4.086 mil)
Nov housing starts (+4.8% to 545K annualized)
Nov building permits (+2.5% to 558K annualized)
Q3 current account (-$125.3B)
10:00 am Dec Philadelphia Fed business index (12.5 frm 22.5)
Friday;
10:00 am Nov leading economic indicators (+1.2% frm +0.5% in Oct)
Core Logic out this morning saying the number of U.S. homes worth less than the debt owed on them dropped in the third quarter, largely because of mounting foreclosures rather than a rise in property values. 10.8 million homes, or 22.5% of those with mortgages, were “underwater” as of Sept. 30, the Santa Ana, California-based real estate information company said in a report today. That was down from 11 million, or 23%, at the end of June, the third straight quarterly decline. Falling property values and unemployment near 10% have spurred a surge in foreclosures. The number of homes offered in foreclosure auctions averaged 110,000 a month in the third quarter compared with about 98,000 in the same period a year earlier, said Mark Fleming, CoreLogic’s chief economist. “There are two ways to reduce negative equity,” Fleming said in a telephone interview today. “Price appreciation or disposition, which means people getting taken out of their homes. At the moment, there’s more disposition.” A further decline in prices threatens to increase the number of homeowners with negative equity, Fleming said. U.S. home values will probably drop $1.7 trillion this year after rising foreclosures and the expiration of buyer tax credits that boosted demand early in the year, Zillow Inc. said Dec. 9. More than $1 trillion of the drop came in the second half, according to Zillow, a Seattle-based real estate data company. (Bloomberg)
Monday, December 13, 2010
Wednesday, December 8, 2010
Mortgage Update
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, December 08, 2010
More heavy selling this morning after rates continued to increase yesterday. Yesterday the 10 yr and mortgage rates jumped 20 basis points and mortgages up 15 basis points. Nothing directly new overnight; interest rates are increasing ion Europe, in Japan and China with the US leading the way higher. Some of the recent increases in rates is likely tied to year end adjustments by investors but the majority of it seems to have eluded analysts and economists. Very unusual that there seems to be no one stepping up to try and put some reasoning behind the spike in rates. It is as if it is happening with shock and awe, no consensus or any particular explanation.
The increase in rates recently, in our opinion, is a final capitulation that interest rates had declined to unsustainable levels. Driven now by attention turning to central banks and countries in Europe that are teetering on defaults. In the US markets see the Fed's $600B QE 2 as a waste of money; the Fed's rationale is and was totally wrong. The Fed's balance sheet has ballooned to over $2T and approaching $3T as Bernanke tries to help the economy grow; it hasn't worked and won't work. Bernanke appears to have made a huge mis-calculation that buying $600B of treasuries would lower interest rates, since Nov 4th when the QE was put in place the 10 yr note has increased 72 basis points and mortgage rates up about the same. Last week alone 30 yr mtg rates increased 10 basis points and are 100 basis points higher than the lows six weeks ago. The markets are saying enough.
The most recent blow to the bond markets; Obama and Republicans adding another $700B to the US budget deficit by planning to cut payroll taxes by 2.0% next year. On the surface it sounds good, more money in the pockets of consumers to spend and lift the economy out of its very anemic growth. No one wants the economy to stall but adding more to the deficit is telling the world the US is still not close to being serious in dealing with US budget deficits. The end of the line of giving the US a pass on exploding deficit spending appears to have arrived.
The MBA today released its Weekly Mortgage Applications Survey for the week ending December 3, 2010. The Market Composite Index, a measure of mortgage loan application volume, decreased 0.9% on a seasonally adjusted basis from one week earlier. The Refinance Index decreased 1.4% from the previous week. This is the fourth weekly decrease for the Refinance Index which reached its lowest level since June 2010. The seasonally adjusted Purchase Index increased 1.8% from one week earlier. This is the third weekly increase for the Purchase Index which reached its highest level since early May 2010. The four week moving average for the seasonally adjusted Market Index is down 8.0%. The four week moving average is up 2.8% for the seasonally adjusted Purchase Index, while this average is down 10.9% for the Refinance Index. The refinance share of mortgage activity increased to 75.2% of total applications from 74.9% the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.66% from 4.56%, with points decreasing to 0.95 from 0.96 (including the origination fee) for 80% loans. The average contract interest rate increased for the fourth consecutive week and is at the highest level since July 2010. The average contract interest rate for 15-year fixed-rate mortgages increased to 3.98% from 3.91%, with points increasing to 0.97 from 0.88 (including the origination fee) for 80% loans. The average contract interest rate increased for the second week in a row and is at the highest level since early September 2010.
At 1:00 this afternoon Treasury will auction $21B of 10 yr notes; yesterday the 3 yr was considered OK overall but it didn't meet the demand that many were expecting, adding a little to the strong sell off yesterday on the 10 yr.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, December 08, 2010
More heavy selling this morning after rates continued to increase yesterday. Yesterday the 10 yr and mortgage rates jumped 20 basis points and mortgages up 15 basis points. Nothing directly new overnight; interest rates are increasing ion Europe, in Japan and China with the US leading the way higher. Some of the recent increases in rates is likely tied to year end adjustments by investors but the majority of it seems to have eluded analysts and economists. Very unusual that there seems to be no one stepping up to try and put some reasoning behind the spike in rates. It is as if it is happening with shock and awe, no consensus or any particular explanation.
The increase in rates recently, in our opinion, is a final capitulation that interest rates had declined to unsustainable levels. Driven now by attention turning to central banks and countries in Europe that are teetering on defaults. In the US markets see the Fed's $600B QE 2 as a waste of money; the Fed's rationale is and was totally wrong. The Fed's balance sheet has ballooned to over $2T and approaching $3T as Bernanke tries to help the economy grow; it hasn't worked and won't work. Bernanke appears to have made a huge mis-calculation that buying $600B of treasuries would lower interest rates, since Nov 4th when the QE was put in place the 10 yr note has increased 72 basis points and mortgage rates up about the same. Last week alone 30 yr mtg rates increased 10 basis points and are 100 basis points higher than the lows six weeks ago. The markets are saying enough.
The most recent blow to the bond markets; Obama and Republicans adding another $700B to the US budget deficit by planning to cut payroll taxes by 2.0% next year. On the surface it sounds good, more money in the pockets of consumers to spend and lift the economy out of its very anemic growth. No one wants the economy to stall but adding more to the deficit is telling the world the US is still not close to being serious in dealing with US budget deficits. The end of the line of giving the US a pass on exploding deficit spending appears to have arrived.
The MBA today released its Weekly Mortgage Applications Survey for the week ending December 3, 2010. The Market Composite Index, a measure of mortgage loan application volume, decreased 0.9% on a seasonally adjusted basis from one week earlier. The Refinance Index decreased 1.4% from the previous week. This is the fourth weekly decrease for the Refinance Index which reached its lowest level since June 2010. The seasonally adjusted Purchase Index increased 1.8% from one week earlier. This is the third weekly increase for the Purchase Index which reached its highest level since early May 2010. The four week moving average for the seasonally adjusted Market Index is down 8.0%. The four week moving average is up 2.8% for the seasonally adjusted Purchase Index, while this average is down 10.9% for the Refinance Index. The refinance share of mortgage activity increased to 75.2% of total applications from 74.9% the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.66% from 4.56%, with points decreasing to 0.95 from 0.96 (including the origination fee) for 80% loans. The average contract interest rate increased for the fourth consecutive week and is at the highest level since July 2010. The average contract interest rate for 15-year fixed-rate mortgages increased to 3.98% from 3.91%, with points increasing to 0.97 from 0.88 (including the origination fee) for 80% loans. The average contract interest rate increased for the second week in a row and is at the highest level since early September 2010.
At 1:00 this afternoon Treasury will auction $21B of 10 yr notes; yesterday the 3 yr was considered OK overall but it didn't meet the demand that many were expecting, adding a little to the strong sell off yesterday on the 10 yr.
Thursday, December 2, 2010
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, December 02, 2010
Treasuries and mortgages opened weaker again today following the huge selling yesterday on belief the ECB would continue to support those economies facing possible debt defaults. After Ireland required a bailout Spain and Portugal moved into the queue for their turn. Yesterday the ECB head Jean Claude Trichet was quoted that he would do what is necessary to keep sovereign debt defaults from occurring. Overnight the ECB meeting didn't come out with a US style QE but the bank said will delay its withdrawal of stimulus measures. Spanish bonds and U.K. gas gained, while U.S. Treasuries fell. Trichet said the ECB will keep offering banks unlimited loans through the first quarter. Seven-day, one-month and three- month operations will be tied to the ECB’s benchmark rate, which it left unchanged at 1.0% today. While a step in the correct direction, the bank fell short of what markets thought yesterday when the US stock market rallied and US interest rates increased the most in one day this year.
At 8:15 this morning the 10 yr note rate traded at 3.01% and mortgage prices were down 15/32 (.47 bp). By 9:00 however some improvement; the 10 yr yield fell back to 2.98%, unchanged from yesterday's close and mortgage prices at 9:00 still lower, down 6/32 (.18 bp). Technically the bond, stock and mortgage markets may have over-reacted and prices are approaching near term oversold momentum on most of the oscillators we track. After a move like we had yesterday we should expect increased volatility; early today the stock index futures were looking better but by 9:00 the DJIA futures were hugging unchanged levels.
At 8:30 weekly jobless claims were reported up 26K to 436K, continuing claims at 4.27 mil frm 4.217 mil last week. Claims data slightly worse than expected (forecasts were for an increase of 16K) but still the total weekly filings remain under 450K that many had seen as a plus in the employment sector. We don't find any particular substance to the 450K level, traders seem to like it though. Employment in the US is still hardly able to meet the increase in the number of new entrants to the job sector.
That the ECB and EU appear ready to deal with debt problems in Europe took the safety trades into US bond markets away yesterday that had provided support the previous three days is one element sending the US rates higher, however we don't hold that it was the center piece for increased rates. Economic data recently has been beating forecasts implying the economy is in fact slowly recovering, yesterday the ADP people said non-farm private jobs increased by 93K, almost double what was thought. The litany of slightly better data points in the US and China recently has put the nail in the coffin for continued low rates at the moment. Also recall that the Fed has made it clear it wants US inflation higher; the combo of better economic outlook and increased inflation levels increased rates; the likelihood that interest rates will decline now is wishful thinking, rates have seen their best levels. We hear a lot of consternation over the jump in mortgage rates, what we should focus on is that mortgage rates are still at historic low levels. Expecting mortgage rates to fall to 4.00% or lower was never in our thinking, now it is not in anyone's' thoughts.
Oct pending home sales out at 10:00, expected down 0.5%, were up a solid 10.5%; pending sales are contracts signed but not yet closed. Yr/yr however pending sales are down 20.5% compared to Oct 2009. The initial reaction added a little gain in stock indexes but no changes in the bond and mortgage markets already weaker.
Tomorrow is employment day; estimates of 145K non-farm private jobs and the unemployment rate unchanged at 9.6%. Trade today should be a lot less hectic than yesterday's strong moves. We are not expecting much change in the rate markets or in the equity markets today ahead of employment tomorrow.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, December 02, 2010
Treasuries and mortgages opened weaker again today following the huge selling yesterday on belief the ECB would continue to support those economies facing possible debt defaults. After Ireland required a bailout Spain and Portugal moved into the queue for their turn. Yesterday the ECB head Jean Claude Trichet was quoted that he would do what is necessary to keep sovereign debt defaults from occurring. Overnight the ECB meeting didn't come out with a US style QE but the bank said will delay its withdrawal of stimulus measures. Spanish bonds and U.K. gas gained, while U.S. Treasuries fell. Trichet said the ECB will keep offering banks unlimited loans through the first quarter. Seven-day, one-month and three- month operations will be tied to the ECB’s benchmark rate, which it left unchanged at 1.0% today. While a step in the correct direction, the bank fell short of what markets thought yesterday when the US stock market rallied and US interest rates increased the most in one day this year.
At 8:15 this morning the 10 yr note rate traded at 3.01% and mortgage prices were down 15/32 (.47 bp). By 9:00 however some improvement; the 10 yr yield fell back to 2.98%, unchanged from yesterday's close and mortgage prices at 9:00 still lower, down 6/32 (.18 bp). Technically the bond, stock and mortgage markets may have over-reacted and prices are approaching near term oversold momentum on most of the oscillators we track. After a move like we had yesterday we should expect increased volatility; early today the stock index futures were looking better but by 9:00 the DJIA futures were hugging unchanged levels.
At 8:30 weekly jobless claims were reported up 26K to 436K, continuing claims at 4.27 mil frm 4.217 mil last week. Claims data slightly worse than expected (forecasts were for an increase of 16K) but still the total weekly filings remain under 450K that many had seen as a plus in the employment sector. We don't find any particular substance to the 450K level, traders seem to like it though. Employment in the US is still hardly able to meet the increase in the number of new entrants to the job sector.
That the ECB and EU appear ready to deal with debt problems in Europe took the safety trades into US bond markets away yesterday that had provided support the previous three days is one element sending the US rates higher, however we don't hold that it was the center piece for increased rates. Economic data recently has been beating forecasts implying the economy is in fact slowly recovering, yesterday the ADP people said non-farm private jobs increased by 93K, almost double what was thought. The litany of slightly better data points in the US and China recently has put the nail in the coffin for continued low rates at the moment. Also recall that the Fed has made it clear it wants US inflation higher; the combo of better economic outlook and increased inflation levels increased rates; the likelihood that interest rates will decline now is wishful thinking, rates have seen their best levels. We hear a lot of consternation over the jump in mortgage rates, what we should focus on is that mortgage rates are still at historic low levels. Expecting mortgage rates to fall to 4.00% or lower was never in our thinking, now it is not in anyone's' thoughts.
Oct pending home sales out at 10:00, expected down 0.5%, were up a solid 10.5%; pending sales are contracts signed but not yet closed. Yr/yr however pending sales are down 20.5% compared to Oct 2009. The initial reaction added a little gain in stock indexes but no changes in the bond and mortgage markets already weaker.
Tomorrow is employment day; estimates of 145K non-farm private jobs and the unemployment rate unchanged at 9.6%. Trade today should be a lot less hectic than yesterday's strong moves. We are not expecting much change in the rate markets or in the equity markets today ahead of employment tomorrow.
Wednesday, December 1, 2010
Rate Lock Advisory - Wednesday Dec. 1st
Wednesday’s bond market has opened down sharply following an early surge in stock prices. Stocks are reacting well to a couple of factors including good news about China’s economy and favorable data here. The Dow is currently up 189 points while the Nasdaq has gained 50 points. The bond market is currently down 31/32, which will likely push this morning’s mortgage rates higher by approximately .375 - .500 of a discount point.
The Labor Department reported early this morning that 3rd quarter worker productivity rose at an annual rate of 2.3%, up from the preliminary estimate of 1.9%. This was slightly lower than forecasts of 2.4% and has not had much of an impact on today’s trading or mortgage pricing.
November’s manufacturing index from the Institute for Supply Management (ISM) was the important data of the morning. It showed a reading of 56.6 that was a little higher than forecasts. This was a decline from October’s reading, but was the 16th consecutive month above 50.0 that indicates manufacturing sector growth. The difference between forecasts and the actual reading is not enough to cause stocks and bonds to move this much. I believe that the stock rally has pulled funds away from bonds more than today’s data has caused concerns about economic growth. The good news is that if this is the case, today’s sell-off on bonds could be an overreaction and only temporary.
The Federal Reserve will release their Beige Book at 2:00 PM ET today. This report, which is named simply after the color of its cover, details economic conditions by region. That information is relied on heavily during the FOMC meetings when determining monetary policy, so its results can influence bond trading and mortgage rates if it shows any significant surprises. More times than not though, this report does not cause afternoon revisions to mortgage rates. There is no particular reason to believe this release will be any different, however, there is the possibility of it doing so.
Tomorrow’s only semi-relevant data is the weekly unemployment numbers from the Labor Department. They are expected to announce that new claims for unemployment benefits rose to 422,000 last week. This data usually does not have a much of an impact on the markets or mortgage rates unless it shows a significant variance from forecasts. Last week’s release of the previous week’s numbers did just that. The unexpected drop of 34,000 new claims pointed towards employment sector strength and helped bond prices to drop sharply ahead of the Thanksgiving holiday. If we see another surprise decline or a large increase in new claims, this data may influence mortgage rates tomorrow, especially since it is the day’s only data. The higher the number of new claims, the better the news for bonds and mortgage pricing.
Friday brings us the almighty monthly Employment report. It is arguably the single most important report we see each month, to it has the potential to cause plenty of volatility in the markets. With no monthly or quarterly data scheduled for release tomorrow, we may see bond traders take a defensive approach during trading tomorrow. This could lead to a little pressure in bonds, probably during afternoon hours. However, if Friday’s report gives is much weaker than expected results, we should see the bond market rebound after it is released. That could easily erase this morning’s increase to mortgage rates.
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.
The Labor Department reported early this morning that 3rd quarter worker productivity rose at an annual rate of 2.3%, up from the preliminary estimate of 1.9%. This was slightly lower than forecasts of 2.4% and has not had much of an impact on today’s trading or mortgage pricing.
November’s manufacturing index from the Institute for Supply Management (ISM) was the important data of the morning. It showed a reading of 56.6 that was a little higher than forecasts. This was a decline from October’s reading, but was the 16th consecutive month above 50.0 that indicates manufacturing sector growth. The difference between forecasts and the actual reading is not enough to cause stocks and bonds to move this much. I believe that the stock rally has pulled funds away from bonds more than today’s data has caused concerns about economic growth. The good news is that if this is the case, today’s sell-off on bonds could be an overreaction and only temporary.
The Federal Reserve will release their Beige Book at 2:00 PM ET today. This report, which is named simply after the color of its cover, details economic conditions by region. That information is relied on heavily during the FOMC meetings when determining monetary policy, so its results can influence bond trading and mortgage rates if it shows any significant surprises. More times than not though, this report does not cause afternoon revisions to mortgage rates. There is no particular reason to believe this release will be any different, however, there is the possibility of it doing so.
Tomorrow’s only semi-relevant data is the weekly unemployment numbers from the Labor Department. They are expected to announce that new claims for unemployment benefits rose to 422,000 last week. This data usually does not have a much of an impact on the markets or mortgage rates unless it shows a significant variance from forecasts. Last week’s release of the previous week’s numbers did just that. The unexpected drop of 34,000 new claims pointed towards employment sector strength and helped bond prices to drop sharply ahead of the Thanksgiving holiday. If we see another surprise decline or a large increase in new claims, this data may influence mortgage rates tomorrow, especially since it is the day’s only data. The higher the number of new claims, the better the news for bonds and mortgage pricing.
Friday brings us the almighty monthly Employment report. It is arguably the single most important report we see each month, to it has the potential to cause plenty of volatility in the markets. With no monthly or quarterly data scheduled for release tomorrow, we may see bond traders take a defensive approach during trading tomorrow. This could lead to a little pressure in bonds, probably during afternoon hours. However, if Friday’s report gives is much weaker than expected results, we should see the bond market rebound after it is released. That could easily erase this morning’s increase to mortgage rates.
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.
Saturday, November 20, 2010
Mortgage Rates Waiting Game Continues. Positive Signs Seen
The movements of mortgage rates higher and lower throughout the week have become progressively more tame. There was almost an entire point of difference between the highs and lows on Monday, whereas today's range has held within a mere quarter of a point.
That's the good news as it implies the QEII bond market cleansing process is in its final stages. The bad news is that even though the movements were tame compared to earlier in the week, rates still traveled in the wrong direction.
Reason? When MBS prices move down precipitously, lenders tend to reprice for the worse more aggressively and more quickly than they would reprice for the better on improved MBS prices. Because the rally we discussed yesterday occurred late in the day moving into the close, and was maintained into this morning, it painted a more stable picture for lenders--one in which they didn't need to respond to a precipitous price change. All that to say that even though we've seen prices move down a bit today, the net effect is mortgage-backed securities (MBS) ended the week largely where they began and the best conventional/FHA/VA 30 year fixed mortgage rates remain in the 4.25% to 4.50% range for well-qualified borrowers. The best conventional/FHA/VA 15 year fixed mortgage rates are in a range between 3.500% and 3.875%.
Important Mortgage Rate Disclaimer: Loan originators will only be able to offer these rates on agency conforming loan amounts to borrowers who are have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recordation + escrows (things like upfront MIP (if required), property taxes, homeowners insurance, accrued interest)
And although I know it may sound like a broken record at this point... VOLATILITY WAS THE NAME OF THE GAME THIS WEEK! But for today, we'll leave it there and skip right to the picture of said volatility.
And while it may seem like a good thing that the range is becoming more stable, this is the sort of pattern that can sometimes be seen in price movements right before they make a big movement in one direction or the other. So again... Volatility PERSISTS. Not a time to be taking significant risks with the shortened holiday week ahead and another round of Treasury debt auctions. Things could still get worse before they get better, but we do expect rates to get better once the QEII cleansing process is complete.
Thursday, November 11, 2010
Mortgage Rates
Rate Lock Advisory - Wednesday Nov. 10th
Wednesday’s bond market has opened flat after this morning’s employment figures showed unexpected strength last week. The stock markets are showing losses, helping to prevent bonds from falling into negative ground. The Dow is currently down 46 points while the Nasdaq has lost 10 points. The bond market is nearly unchanged from yesterday’s close, but we will still likely see an increase of approximately .250 - .375 of a discount point in this morning’s mortgage rates due to weakness late yesterday.
This morning brought two pieces of economic data, but neither is considered to be highly important. September’s Goods and Services Trade Balance report showed that the U.S. trade deficit stood at $44.0 billion. This was a little smaller than the $44.8 billion that was expected, but was not a wide enough variance to affect mortgage rates.
The Labor Department said that 435,000 new claims for unemployment benefits were filed last week. This was short of expectations and a 4-month low, indicating that the labor market was stronger than thought last week. This is negative news for the bond market, but since it is only a single week’s worth of new claims it’s impact on today’s mortgage rates has been minimal.
Also worth noting is today’s 30-year Bond auction that may influence mortgage rates. Yesterday’s 10-year Note sale did not go very well, so there is little optimism that today’s auction will be much better. The bond market was in selling mode late yesterday, causing some lenders to revise rates upward during afternoon trading. Those losses are the biggest portion of this morning’s increase in mortgage pricing. I don’t believe that today’s sale will cause significant movement in mortgage rates, regardless if the sale goes well or not. But it could lead to a minor revision after results are posted at 1:00 PM ET.
The bond market will be closed tomorrow in observance of the Veterans Day holiday. The stock markets will be open for trading though. None of the markets will close early ahead of the holiday, so I would not be surprised to see some movement in rates before closing today as investors and lenders prepare for the day off.
PLEASE NOTE: Since the bond market is closed tomorrow, there will be no update to this report. Some lenders may be open for business, but will likely use this afternoon’s mortgage rates until Friday morning.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock 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
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Wednesday’s bond market has opened flat after this morning’s employment figures showed unexpected strength last week. The stock markets are showing losses, helping to prevent bonds from falling into negative ground. The Dow is currently down 46 points while the Nasdaq has lost 10 points. The bond market is nearly unchanged from yesterday’s close, but we will still likely see an increase of approximately .250 - .375 of a discount point in this morning’s mortgage rates due to weakness late yesterday.
This morning brought two pieces of economic data, but neither is considered to be highly important. September’s Goods and Services Trade Balance report showed that the U.S. trade deficit stood at $44.0 billion. This was a little smaller than the $44.8 billion that was expected, but was not a wide enough variance to affect mortgage rates.
The Labor Department said that 435,000 new claims for unemployment benefits were filed last week. This was short of expectations and a 4-month low, indicating that the labor market was stronger than thought last week. This is negative news for the bond market, but since it is only a single week’s worth of new claims it’s impact on today’s mortgage rates has been minimal.
Also worth noting is today’s 30-year Bond auction that may influence mortgage rates. Yesterday’s 10-year Note sale did not go very well, so there is little optimism that today’s auction will be much better. The bond market was in selling mode late yesterday, causing some lenders to revise rates upward during afternoon trading. Those losses are the biggest portion of this morning’s increase in mortgage pricing. I don’t believe that today’s sale will cause significant movement in mortgage rates, regardless if the sale goes well or not. But it could lead to a minor revision after results are posted at 1:00 PM ET.
The bond market will be closed tomorrow in observance of the Veterans Day holiday. The stock markets will be open for trading though. None of the markets will close early ahead of the holiday, so I would not be surprised to see some movement in rates before closing today as investors and lenders prepare for the day off.
PLEASE NOTE: Since the bond market is closed tomorrow, there will be no update to this report. Some lenders may be open for business, but will likely use this afternoon’s mortgage rates until Friday morning.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock 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
Monday, November 8, 2010
Mortgage Market Snapshot
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| Monday, November 08, 2010 | ||
| Interest rate markets are flat this morning with no driving news and ahead of this afternoon's $32B 3 yr note auction. No economic data today, a few Fed speakers but not expected to rock the boat. Treasury is conducting its quarterly refunding this week, auctioning a total of $72B of treasuries; today the 3 yr note, tomorrow $24B of 10 yr notes and o Wednesday $16B of 30 yr bonds.
Not much in the data world this week; on Thursday the bond and mortgage markets will be closed for Veteran's Day while equity and futures markets will stay open. At 9:30 the DJIA opened down 43, the 10 yr note at 9:30 +2/32 with its rate at 2.53%, mortgage prices that traded unchanged until 9:30 were up 2/32 (.06 bp).
Still a lot of hand-wringing around the world over the Fed's decision to buy $600B of treasuries. Most central bankers worry over the potential of currency wars with countries trying to drive their currencies lower to capture export business. Unlikely that will occur but with the Fed out at the edge with its QE uncertainty is the dominating concern now. Over the weekend Bernanke commented the Fed isn't aiming at an increase in inflation, really? What Bernanke meant to imply (we suppose) is that the Fed isn't trying to set off an inflationary spiral but in an attempt to drive off deflation fears, the Fed does want the level of inflation to increase to its general target of 2.0% to 2.5% frm 1.0% presently. “I have rejected any notion that we are going to raise inflation to a super-normal level in order to have effects on the economy,” Bernanke said in a panel discussion at a Fed conference in Jekyll Island, Georgia. “It’s critical for us to maintain inflation at an appropriate level.” Friday G-20 meets with leaders of their countries; looks like the US will have a lot to convince other G-20 countries that we are on the correct path.
Since the FOMC meeting on 9/21 when the Fed said it was prepared to add additional stimulus with another QE the bellwether 10 yr note and mortgage rates have rallied, then retreated to leave those rates slightly lower but so far there has not been the move many were expecting. Many analysts and economists were forecasting the 10 yr note would fall to 2.25% frm 2.50% area now. We thought then, and now, that rates would not likely fall much on the easing. If, as the Fed believes, interest rates at the short and belly of the curve stay generally low it will add growth in the economy and likely edge inflation up a tad; hard to paint the picture of much lower long term rates under those circumstances.
This Week's Economic Calendar: Today; 1:00 pm $32B 3 yr note auction Tuesday; 10:00 am Sept wholesale inventories (+0.6%) 1:00 pm $24B 10 yr note auction Wednesday; 7:00 am MBA mortgage applications (N/A) 8:30 am weekly jobless claims (-7K to 450K) Sept trade deficit (-$45.0B) Oct import and export prices (N/A) 1:00 pm $16B 30 yr bond auction 2:00 pm Oct Treasury budget (-$140B) Thursday; Veteran's Day bond and mtg markets closed; stocks trade Friday; 9:55 am U. of Michigan mid-month consumer sentiment index (69.0 frm 67.7)
We expect a generally quiet day in the rate markets with little changes by the end of the day. | ||
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