Mortgage Rates Fall After Treasury Auction

A lack of economic data combined with generally optimistic actions in the stock market kept mortgage-backed securities mostly unchanged yesterday morning, however, following a strong 10 yr TSY note auction, mortgage rates made modest improvements in the afternoon.

The U.S. Department of Labor released Weekly Jobless Claims data at 830 this morning.  This weekly report totals the number of Americans that filed for first time unemployment benefits in the prior week.  Included within this report is the continuing claims which totals the number of Americans who continue to file for benefits.   The report indicated that first time claims last week fell by 26,000 which is slightly better than what was expected by economists.   In addition, the continuing claims also fell by more than expected to 6.088 million from 6.24million last week. READ MND STORY

The U.S. Department of Commerce released monthly Trade Balance data this morning.Trade balance data reports the difference between the monetary value of a country's exports and imports. A positive balance, or trade surplus, means exports exceed imports and illustrates that a country's economy is globally competitive. A negative balance of trade is known as a trade deficit or trade gap.

Today's report shows that our nations trade gap in July increased more than expected to -$32 billion.  Imports increased by a record 4.7% while our exports only posted a 2.2% gain.    The big increase in imports is being attributed to government stimulus, notably the cash for clunkers program, which increased demand for autos.   With that program now being over, it will be interesting to see how imports post next month.  READ  MND STORY

At 1pm eastern, the U.S. Department of Treasury will hold its final auction of the week with $12billion IN 30 year bonds be offered..  Yesterday’s auction of $20billion 10 year notes saw very strong demand which helped MBS to post modest gains in price.   This strong demand for our nation’s debt helps to keep mortgage rates low.   Matt and AQ will cover the results on the MBS Commentary blog. 

 

Reports from fellow mortgage professionals indicate that mortgage rates are improved from yesterday.  The par 30 year conventional rate mortgage is now in the 4.75% to 5.00% range for the best qualified consumers.  In order 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 one point loan origination/discount/broker fee.  If you are looking to access equity in your home, expect either a higher interest rate or additional fees.  Typically, equity loans are .125% to .25% higher than a regular purchase or refinance mortgage without paying the additional fees. 

We continue to see the best rates sheets since early this summer. If you have been floating, your rate should have improved marginally in the past week.  Word of caution on floating...remember, rates move higher much quicker than they move lower.