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Mortgage Rates End Week Slightly Higher

February 16th, 2010 8:33 AM

Mortgage Rates End Week Slightly Higher

dependent upon Treasury auctions and the behavior of stocks.

After three below average Treasury auctions and a few days of positive progress in stocks, mortgage rates are ending the week slightly higher than where they started.

Based on about 20 investor rate sheets, the best rate a consumer could be quoted, without paying a 2 points, is 4.75%, but only a few lenders are offering rates that low at the moment. For the most part, the best mortgage rate consumers could be quoted is 4.875%.

Of course this assumes you are a 740+ FICO borrower with a stable job history and 45% debt to income ratio looking to do an 80% rate/term refinance on your owner occupied property. If you don't fall into that camp, your borrowing costs will be higher because of THESE loan pricing adjustments.

Financial markets are closed on Monday in observance of President's Day. Many mortgage professionals will still be working and a few lenders will even publish mortgage rate sheets. They won't be any better than today but they could be worse. I would expect mortgage rates to be very similar to today's pricing.

We published some commentary on the outlook for mortgage rates after the Federal Reserve exits the mortgage market. READ IT HERE

Posted by Anthony J. Hood on February 16th, 2010 8:33 AMPost a Comment (0)

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This week and mortgage rates

February 28th, 2010 8:18 PM

This week brings us the release of six economic reports to be concerned with. Two of the reports are considered to be very important, but nearly all of the week's releases have the potential to affect mortgage rates. With reports being posted each day except Tuesday, we will likely see a fairly active week in mortgage rates.

The week's first data comes tomorrow morning with the release of two relevant reports. The first is January's Personal Income ad Outlays data at 8:30 AM ET, which gives us an indication of consumer ability to spend and current spending habits. Current forecasts call for an increase in income of 0.4% while spending is expected to rise 0.4%. A larger than expected increase in spending would be bad news for the bond market and could drive mortgage rates higher. However, weaker than expected numbers should help push mortgage rates slightly lower tomorrow.

The Institute for Supply Management (ISM) will release th eir manufacturing index for February late tomorrow morning. This index measures manufacturer sentiment and can have a pretty large impact on the financial and mortgage markets if it varies from forecasts. It is expected to show a decline from January's 58.4 to 57.8 this month. This is important because a reading above 50.0 means more surveyed manufacturers felt business improved during the month than those who felt it had worsened, meaning likely growth in the manufacturing sector. If we see a weaker than expected reading, the bond market could rally. But, a higher than forecasted reading could lead to major selling in bonds, causing mortgage rates to rise tomorrow morning.

The Fed Beige Book is the next report scheduled for release and it will be posted Wednesday afternoon. This report details economic activity throughout the country by region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trad ing Wednesday. It probably will not cause a major sell off in the stock or bond markets, but could cause enough movement in bond prices to possibly improve or worsen mortgage rates slightly if it reveals any significant surprises.

There are two reports scheduled for release Thursday morning. The first is the revised Productivity index for the 4th Quarter of last year. The preliminary reading posted last month showed an annual rate of 6.2% increase in worker output. Analysts are expecting to see no change to the initial reading. Employee productivity is watched fairy closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns.

January's Factory Orders will be posted late Thursday morning, which will give us another measurement of manufacturing sector strength. This data is similar to last week's Durable Goods, except this report covers orders for both durable and non-du rable goods. Current forecasts are calling for an increase in new orders of approximately 1.2%. A smaller than expected rise would be good news for the bond market and could lead to an improvement in mortgage rates.

The biggest news of the week comes Friday morning when one of the single most important monthly reports we see will be posted. The Labor Department will release February's Employment report at 8:30 AM ET Friday. Some of the important portions of the report will give us the unemployment rate, number of new jobs added or lost and the average hourly earnings reading. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a large drop in payrolls and little or no increase in earnings. Current forecasts are calling for 0.1% increase in the unemployment rate to 9.8% and approximately 20,000 jobs lost during the month.

Overall, look for a fairly active week for mortgage rates. Friday is undoubte dly the biggest day of the week, but tomorrow may also bring noticeable movement in mortgage rates. It is fairly safe to label Tuesday the least important with no relevant data scheduled for release, but we may see movement in rates several days this week.

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... Lock if my closing was taking place between 21 and 60 days... Lock 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.

Posted by Anthony J. Hood on February 28th, 2010 8:18 PMPost a Comment (0)

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Wednesday's bond market

February 24th, 2010 11:44 AM

Wednesday's bond market had initially opened down slightly but has since moved into positive territory during Fed Chairman Bernanke's congressional testimony. The stock markets are posting fairly strong gains after the Senate passed a $15 billion jobs creation bill. The Dow is currently up 75 points while the Nasdaq has gained 20 points. The bond market is currently up 4/32, which should improve this morning's mortgage rates by approximately .125 of a discount point.

January's New Home Sales report was posted late this morning, showing a surprising drop in sales of newly constructed homes. The 11.2% decline in sales last month dropped them to their lowest level on record. That indicates that the housing sector is not as stabile as some wanted to believe and can be good news for the bond market. However, this data covered only approximately 15% of all home sales in the U.S. Friday's Existing Home Sales report tracks the other 85% of sales.

Cha irman Bernanke is in the process of delivering the Fed's semi-annual testimony on the status of the economy to the House Financial Services Committee. During his prepared statement he indicated concern about the employment sector and the unemployment rate that is expected to remain high for quite some time. He also said that he expects inflation to remain under control. Both were good news for the bond market and helped move bonds into positive ground.

He will continue to answer questions from committee members and any surprise answers could lead to more volatility in the markets today. He will repeat this performance for the Senate Banking committee tomorrow, but the second day usually does not bring many surprises. The prepared statement will likely be quite similar to today's speech, so any shocking developments will have to come from the Q & A part of the proceeding.

The only important data scheduled for release tomorrow is January's Durable Go ods Orders data. This data gives us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. A smaller increase than the 1.4% that is expected would be good news for the bond market and mortgage rates. This data is quite volatile from month-to-month, so large swings are fairly normal.

We will also get weekly unemployment figures from the Labor Department, but unless there is a wide variance between the announced number of new claims and the 460,000 total that is expected, this data will probably have little impact on tomorrow's mortgage pricing.

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... Lock if my closing was taking place between 21 and 60 days... Lock if my closing was taking place over 60 days from now... This is only my opinion of w hat 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.

Posted by Anthony J. Hood on February 24th, 2010 11:44 AMPost a Comment (0)

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Short Term Lock/Float Bias and the Week Ahead

February 22nd, 2010 5:02 PM

Short Term Lock/Float Bias and the Week Ahead

Mortgage rates rose, stabilized, then rose again and again and again on Friday last week. That's a three day skid of rising rates. Economic data wasn't necessarily great, but it wasn't bad either. The Federal Reserve did hike the rate at which they lend emergency funds to banks in need. While this event did cause a commotion and alter market sentiment, the net effect was not seen as a reason behind increases in mortgage rates. The Federal Reserve's planned exit from the secondary mortgage market has also played a minimal role in rising rates. The general explanation behind rising mortgage rates has been a slow and steady uptick in benchmark Treasury yields. Because mortgage-backed security yields track the direction of benchmark Treasury yields, mortgage rates have been generally higher lately.

There are several technical and fundamental reasons behind rising government borrowing costs (benchmark Treasuries), but the all encompassing explanation is that economist outlooks are "less bad". A record economic contraction now appears to have stabilized. The record dip in stocks that came along with it has almost completely corrected, and benchmark Treasury yields are now rising from all-time record lows. 2009 was a year of extremes, something we all grew accustomed to, but something that is not expected to continue forever.

As long as nothing drastically negative occurs economically or financially in the next few months, which global governments have been diligently responsive to, mortgage rates are expected to continue to gradually rise. Unless housing really falls flat on it's face when the Federal Reserve exits the secondary mortgage market, which we are not expecting.

Today was a very slow day in the rates marketplace but the week ahead is full of Fed speak and plenty of economic data.

Here are the highlights:

Tuesday

S&P Case Shiller Home Price index (medium impact unless its really far from expectations)
Consumer Confidence (medium impact)
$44 billion 2 year notes will be auctioned by the US Treasury (more than medium impact less than big impact)
St. Louis Federal Reserve Bank President James Bullard speaks in Virginia on regulatory reform (more than low impact less than medium, next guy overshadows)
Ben Bernanke, chairman of the Federal Reserve, speaks before the House Financial Services Committee. The hearing is called “Prospects for Employment Growth: Is Additional Stimulus Needed?” (high impact)

Wednesday

MBA Applications Index (low impact)
New Home Sales (medium impact. high impact if S&P surprises in either direction)
Ben Bernanke delivers his semiannual Monetary Policy Report to House Financial Services Committee (high impact)
$42 billion 5 year notes will be auctioned by the US Treasury (more than medium impact less than big impact)

Thursday

Durable Goods Orders (probably medium impact. potential for high impact)
Initial Jobless Claims, Continued Jobless Claims, Emergency Benefits (medium impact. high impact if Bernanke says something like the labor market is weaker than anticipated)
Ben Bernanke continues repeats his semiannual Monetary Policy Report to Senate Banking Committee. (Q&A will be high impact)
James Bullard speaks again, this time in Texas regarding the economy. (low impact. Bernanke overshadows)
$32billion 7 year notes will be auctioned by the US Treasury (high impact potential)

Friday

Advance 4th Quarter GDP is revised to Preliminary 4th Quarter Real GDP read. One more revision after this revision. (medium impact if better. high impact if revision is down)
Chicago Purchasing Managers Index (more than low impact. less than medium impact)
Consumer Sentiment (medium impact)
Existing Home Sales (medium impact if as expected. high impact if far from forecasts)

For a more in-depth discussion, read MND's The Week Ahead

Reports from fellow mortgage professionals indicate lenders offered slightly improved mortgage rate pricing today. The par 30 year conventional rate mortgage has fallen back to the 4.875% to 5.125% range for well qualified consumers. To secure a par interest rate you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee. You may elect to pay less in upfront costs, but you will have to accept a higher interest rate.

It will be a very busy week of economic data releases and headline news events. We have casually discussed the idea of a short term float position. This is a very risky move, but if you are approaching the 10 day window to lock your loan, and have a few days to watch, there might be an opportunity to pick up 0.125% in rate. That's really not much in the grand scheme of things unless you are floating a high-cost area loan amount.

With that said, if you are 20 days out of closing, I still I favor locking over floating.

Posted by Anthony J. Hood on February 22nd, 2010 5:02 PMPost a Comment (0)

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This weeks market

February 22nd, 2010 9:32 AM

This week brings us the release of six pieces of economic data for the bond market to digest along with some very important testimony from Fed Chairman Bernanke. Two of the reports are considered to be of low importance, but since we have data being posted every day of the week except for tomorrow, it is likely that we will see plenty of movement in mortgage rates the next few days.

None of this week's economic data is scheduled for release tomorrow. We do, however, have Congressional testimony by Chairman Bernanke late tomorrow morning. He will be speaking to a House Financial committee about employment growth and whether further stimulus is needed. These are hot topics so his words may influence the markets and possibly mortgage rates.

Tuesday morning brings us the first of this week's data with the release of February's Consumer Confidence Index (CCI) during late morning trading. This Conference Board index measures consum er confidence in their personal financial situations, giving us a measurement of consumer willingness to spend. Since consumer spending makes up two-thirds of the economy, related data is considered important in terms of gauging economic activity. It is expected to show a decline in confidence from 55.9 in January to 55.0 this month. A lower reading would be considered good news for bonds and mortgage rates.

January's New Home Sales report will be posted late Wednesday morning. This is one of the least important reports of the week, and it is the sister report to Friday's Existing Home Sales release. They measure housing sector strength and mortgage credit demand, but usually do not have a significant impact on bond trading or mortgage rates. They are both expected to show an increase in sales.

Mr. Bernanke will deliver the Fed's semi-annual testimony on the status of the economy late Wednesday and Thursday mornings. He will be speak ing to the House Financial Services Committee Wednesday and the Senate Banking Committee Thursday. Market participants will watch the Fed Chairman's words very closely. He is required to deliver this testimony twice a year, which is considered to be of extreme importance to the financial markets. We almost always see the markets move as a result of what he says during this testimony. Look for him to address the unemployment and housing crises specifically and their impact on the overall economy. His testimony begins at 10:00 AM ET with a prepared statement then is followed by Q & A with committee members. I am expecting to see the markets fluctuate during this session, possibly affecting mortgage rates also.

The only important data scheduled for release Thursday is January's Durable Goods Orders data. This data gives us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. A smaller increase than the 1.5% that is expected would be good news for the bond market and mortgage rates. This data is quite volatile from month-to-month, so large swings are fairly normal.

The first of two revisions to the 4th Quarter GDP reading is scheduled for release Friday morning. Analysts' forecasts currently call for an annual rate of growth of 5.6%, indicating that the economy was slightly weaker in the last quarter of the year than initially thought. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market, while a sizable downward revision would be good news and could lead to improvements in mortgage pricing.

The last piece of data scheduled for release this week is the University of Michigan's revision to their Index of Consumer Sentiment for February. Current forecasts show this index revising sligh tly higher than previously thought. The preliminary reading was 73.7 and is now expected to stand at 73.9, indicating that consumer sentiment was slightly stronger than previously thought. This index is fairly important because it helps us measure consumer confidence that translates into consumer willingness to spend.

In addition to this week's economic reports and Chairman Bernanke's speaking dates, there are two relatively important Treasury auctions that may also influence bond trading enough to affect mortgage rates. There will be an auction of 5-year Notes Wednesday and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, strong sales usually make bonds more attractive to investors and bring more funds into bonds. The buying of bonds tha t follows usually translates into lower mortgage rates.

Overall, look for plenty of movement in bond prices and mortgage rates this week. I think we will see the most movement either Wednesday or Thursday, but Friday may be fairly active also. This would be a very good week to maintain contact with your mortgage professional, especially if still floating an interest rate.

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... Lock if my closing was taking place between 21 and 60 days... Lock 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.

Posted by Anthony J. Hood on February 22nd, 2010 9:32 AMPost a Comment (0)

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Credit card bills have you down???.

February 21st, 2010 10:47 AM

Credit card bills have you down???

Debt Management programs are designed to get you out of debt up to 75% faster by reducing, and in a lot of cases completely eliminating the interest rates on your debt. This way, most of your money goes to paying down your principle instead of the interest. Have you ever noticed how little of your payments actually goes toward the principle? Did you know, when only paying your minimums, it takes approximately 6 years for every $3000 you're in debt to eliminate the balance?

When done properly consolidating your debts has no negative impact on your credit score because it reduces your debt to income ratio and is not viewed as a hardship program like Debt Negotiation or Bankruptcy.

Interest rate reduction programs were created by the creditors to recapture principle that would otherwise be at risk due to Bankruptcy or Debt Negotiation. People like you can take advantage of them without hurting your credit while significantly improving your financial situation. This way the creditors can recapture 100% of their principle and you can get out of debt a lot faster. Does this sound like what you are looking for?

Or are you late on your payments?

Consider a Debt Settlement program our attorneys will stop creditor phone calls and settle your debt typically at 30 to 40 cents on the dollar and you will not have the negative effects of having a bankruptcy on your credit report for the next ten years.

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Call now for your free financial analysis!!

Anthony J. Hood

Equity Investment Capital

866-532-1744

tony@equityinvestmentcapital.com

www.equityinvestmentcapital.com

Posted by Anthony J. Hood on February 21st, 2010 10:47 AMPost a Comment (0)

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Mortgage Rates moved higher today.

February 11th, 2010 9:47 AM

Refinance Demand Still Slow. Mortgage Rates Move Higher Again

Mortgage rates moved up yesterday after the first of three treasury auctions scheduled this week failed to match expectations.

Weak demand for $40 billion 3 year Treasury notes and the beginnings of a recovery bounce in stocks were cited as the driving force behind rising interest rates. There were a few reports of lenders recalling rate sheets, but for the most part, reprices for the worse were not widespread.

The Mortgage Bankers Association today released the Weekly Survey on Mortgage Application Activity for the week ending February 5, 2010.

The MBA survey covers over 50 percent of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. A rising trend of mortgage applications indicates an increase in home buying interest, a positive for the housing industry and economy as a whole. Furthermore, in a low mortgage rate environment, such a trend implies consumers are seeking out lower monthly payments which can result in increased disposable income and therefore more money to spend on discretionary items or to pay down other debt.

In last week's release, mortgage applications increased 21%. Refinance apps were up 26.3% while purchase applications improved 10.3%. These gains were impressive but the MBA warned of rising rates.

In today's survey release, overall mortgage loan demand declined 1.2%.

Here is a recap of this week's survey:

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.2 percent on a seasonally adjusted basis from one week earlier.

The Refinance Index increased 1.4 percent from the previous week. This is an improvement, but demand failed to gain traction even as mortgage rates fell to 2010 lows last week. The refinance share of mortgage activity increased to 69.7 percent of total applications from 69.2 percent the previous week. The chart below highlights how higher borrower loan demand was in early 2009. Current levels are considerably slower.

The Purchase Index decreased 7.0 percent from one week earlier. The unadjusted Purchase Index decreased 1.1 percent compared with the previous week and was 7.5 percent lower than the same week one year ago.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.94 percent from 5.01 percent, with points increasing to 1.06 from 1.04 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The only other report on the day was the release of International Trade data. The Trade Balance report measures the monthly difference between what our nation imports and what our nation exports. The report showed that our trade deficit widened much more than expected to $40.2billion from $36.4billion last month. Economists had forecasted a decline in our trade deficit to $35.8billion. The main cause of the wider trade gap was the recent rise in commodities, which have since declined indicating next month’s report should show some narrowing. One positive note from the report was an increase in exports, which can lead to more jobs here. This was the eighth consecutive monthly gain in exports. The larger than expected widening of the Trade Balance means a downward revision is due for Q4 2009 GDP data.

The main event on the day was the second of three US Treasury auctions scheduled for this week. Today's auction offered $25 billion 10 year notes. The 10 year is more influential over mortgage rates than the 3 year Treasury note. Unfortunately, much like the 3 year note auction, this auction was weaker than anticipated, which consequently pushed mortgage rates higher afterwards. Matt and AQ covered the results shortly after the auction. You can see, they issued a reprice for the worse alert immediately. REPRICE ALERT

Mortgage Rates moved higher today.

Reports from fellow mortgage professional indicate the par 30 year conventional rate mortgage has moved up to the 4.875% to 5.125% range for well qualified consumers. To secure a par rate you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee. If you are seeking a 15 year term, you should expect par in the 4.25% to 4.50% range with similar costs.

I continue to advise locking.

In 2010, mortgage rates have proven unable to push lower than 4.75%. I continue to believe that 4.75% will be the lowest we will see this year, unless there is a major shift in investor sentiment and economic outlooks.

Posted by Anthony J. Hood on February 11th, 2010 9:47 AMPost a Comment (0)

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I see a great opprotunity to refinance!!

February 4th, 2010 11:12 AM

Asia Pacific & Australia

		Index	Change	%Change	Level	Last Update *

	Australia	ASX 100	-20.90	-0.55%	3,792.20	2/4 12:00am
	Australia	ASX All Ords	-29.10	-0.62%	4,644.10	2/4 12:00am
	Australia	ASX Mid-cap 50	-42.40	-1.00%	4,197.30	2/4 12:00am
	Hong Kong	Hang Seng	-380.44	-1.84%	20,341.64	2/4 12:00am
	Hong Kong	HSCC Red Chip	-90.42	-2.22%	3,986.03	2/4 4:01pm
	Japan	Nikkei 225	-48.35	-0.46%	10,355.98	2/4 12:00am
Europe
		Index	Change	%Change	Level	Last Update *

	Belgium	Bel 20	-74.76	-2.96%	2,454.90	2/4 6:08pm
	Europe	DJ Stoxx	-70.69	-2.83%	2,425.13	2/4 7:00pm
	Europe	Euronext 100	-19.35	-2.90%	647.97	2/4 6:08pm
	Europe	Euronext 150	-42.61	-2.97%	1,391.37	2/4 6:08pm
	France	CAC	-104.22	-2.75%	3,689.25	2/4 6:13pm
	France	SBF 80	-121.72	-2.56%	4,627.19	2/4 6:07pm
	France	SBF 120	-75.68	-2.72%	2,704.46	2/4 6:08pm
	Germany	DAX	-138.85	-2.45%	5,533.24	2/4 6:31pm
	Germany	MDAX	-217.30	-2.83%	7,458.38	2/4 6:31pm
	Germany	TECDAX	-25.19	-3.06%	797.36	2/4 6:31pm
	Netherlands	AEX	-9.80	-2.94%	323.23	2/4 6:08pm
	Norway	OSE Industry	-3.55	-0.21%	195.67	2/4 5:28pm
	Sweden	OMX	-1.80	-0.19%	970.00	2/3 12:00am
	Sweden	OMSX All Share	-0.32	-0.11%	307.12	2/3 12:00am
	UK	FTSE 100	-113.84	-2.17%	5,139.31	2/4 4:35pm
	UK	FTSE All Shares	-57.80	-2.14%	2,638.03	2/4 4:46pm
	UK	FTSE Eurotop	-59.28	-2.73%	2,108.94	2/4 5:05pm
	UK	FTSE Techmark	-20.90	-1.19%	1,730.72	2/4 4:45pm
Americas
		Index	Change	%Change	Level	Last Update *

	Canada	TSE 300	-247.30	-2.17%	11,143.16	2/4 1:54pm
	Canada	CDNX	-58.99	-3.90%	1,454.99	2/4 1:54pm
	Canada	S&P/TSX 60	-14.48	-2.17%	651.30	2/4 1:54pm

Posted by Anthony J. Hood on February 4th, 2010 11:12 AMPost a Comment (0)

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