Mortgage Rate Watch
Mortgage Rates Predictions and Analysis
MORTGAGE RATES: Best Lock/Float Advice MND Can Offer
I think it's safe to say that, consistently for the last 30 to 45 days, at least one lender (regional, major, or independent) has offered below market "record low" mortgage rates. Investor demand is consistently healthy for agency MBS, such that their prices are hitting new record highs on a daily basis. No lender faces a shortage of funding, nothing seems to be able to distract mortgage rates from rallying! This situation has forced us to refocus our attention on the competitiveness of the primary mortgage market, instead of closely monitoring every move in the secondary mortgage market (MBS). Here's how I would play it.... The "best executed" lock/float strategy comes down to finding an originator who knows the loan market, studies underwriting guidelines, and...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Can Mortgage Rates Go Any Lower?
Well, here we are on "hump day" and mortgage rates are still detached from the price fluctuations of the secondary mortgage market. Instead, the ups and downs of consumer borrowing costs continue to be driven primarily by the capacity constraints of major lenders, the market makers for mortgage rates. One misconception is record low mortgage rates have drawn out a hoard of "fence sitting" borrowers who are bustling with excitement to refinance. Yes, media coverage of record low mortgage rates has attracted attention from some homeowners, but the crowds just don't compare to the mini-frenzy we witnessed in early 2009. This tells us the capacity constraints of major lenders are not totally due to an increase in loan applications. With the larger lenders allocating newly...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Mortgage Rates Still Immune to Rising Benchmark Yields
A much better than expected read on New Home Sales helped the stock market post strong gains yesterday. Typically, when stocks advance, their gains come at the expense of interest rates. While benchmark Treasury yields have risen over the last week, mortgage-backed securities have managed to retain their “flight to safety” bid. MBS prices are holding steady near record highs and mortgage rates are holding steady near record lows. A "flight to safety" occurs when investors are nervous about owning risky assets like stocks but do not want to miss out on earning returns on their funds, so they move their money into risk-free U.S Treasury debt and agency MBS to provide a safe-haven AND an investment return. To remind readers, as benchmark Treasury yields fall, prices of mortgage...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
What Might Move Mortgage Rates in the Week Ahead?
The road got a little bumpy, but last week came to a close with consumer borrowing costs once again priced near record lows. We were expecting the ups and downs of related markets to play a larger role in the behavior of mortgage rates, but in the end, lender loan pricing strategies did not follow the directional guidance offered by mortgage-backed securities (MBS) prices in the secondary mortgage market. Instead, the movement of mortgage rates was more reflective of competition and "turn times" in the primary mortgage market. This has been a theme lately... What do we think will move mortgage rates in the week ahead? Based on shifting tones in the investing marketplace, it's tempting to say mortgage rates might finally re-attach to the movement of MBS prices in the secondary...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Consumer Borrowing Costs Improve, Ignoring MBS Price Declines
Mortgage rates broke their two day losing streak yesterday after lenders repriced for the better following sobering comments from the Chairman of the Federal Reserve. In his testimony, Ben Bernanke reiterated that the Fed's economic outlook is “unusually uncertain”. He went on to remind that inflation is trending lower, which is supportive of exceptionally low interest rates for an “extended period”. While there was no change in the "best execution" no points mortgage rate, total consumer borrowing costs declined 0.125% to 0.25%, erasing increases seen earlier in the day. The economic calendar picked up this morning. We had several influential releases. First on the docket: Weekly Jobless Claims Released by the Department of Labor, this report provides...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Mortgage Rates Suffer as Lenders Process Influx of New Applications
Mortgage rates extended their losing streak to a whopping TWO (2) days yesterday. Scary! No not really though. Although borrowers who were floating their note rate did see closing costs rise by a few basis points, in the grand scheme of things, the increases were tiny. Gotta put it in perspective... The most aggressive loan pricing we've ever witnessed was offered by lenders last Friday. If you were trying to call a bottom, that's the latest one. The Mortgage Bankers Association confirmed this for us today when they released the results of their Weekly Loan Applications Survey . From the Release: "The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.59 percent from 4.69 percent, with points increasing to 1.04 from 0.96 (including the origination fee...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Mortgage Rates Not Following the Directional Guidance of MBS Market
After spending the previous week in their own little perfect world, mortgage rates hit the reset button yesterday. Borrowers who were floating their note rate saw closing costs rise by about 0.125% (of the loan amount). This modest increase in cost was however not large enough to push the best par mortgage rates out of the 4.375% to 4.625% range. On the scheduled economic data front, the housing sector was in focus today. The Commerce Department released "New Residential Construction" at 8:30am eastern. This report is more commonly known as Housing Starts and Building Permits. Housing starts data estimates how much new residential real estate construction occurred in the previous month. Building Permits data provides an estimate on the number of homes planning on being built. Recent...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
What Will Move Mortgage Rates in the Week Ahead?
First of all I would like to thank AQ for taking over my blog last week while I enjoyed some much needed vacation time. Thanks Adam! Mortgage rates withstood everything related markets could throw their way last week. While several market crosswinds, created by new economic data releases, the beginning of earnings season, and the publication of the Federal Reserve's FOMC meeting minutes, manage to push stocks and benchmark bond yields in a wide range, mortgage rates went about their business as if they were detached from reality. The major lenders were battling it out for business... The events calendar in the week ahead focuses on the health of housing, the Federal Reserve's semi-annual monetary policy report to Congress, corporate earnings, and European Union bank stress tests. Here...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Mortgage Rates Detach from Related Markets as Lenders Compete for Business
Mortgage rates looked like they were doomed to rise from record breaking territory as the week was getting started . Pressure was mounting because stocks were on a four-day winning streak, the "flight to safety" in benchmark Treasuries was fading, and mortgage-backed securities prices were extremely expensive. A flight to safety happens when investors are nervous about owning risky assets like stocks, but do not want to miss out on earning a return on their funds, so they allocate their money into risk-free U.S Treasury debt to provide a safe-haven AND an investment return. To remind readers, as benchmark Treasury yields fall, prices of mortgage-backed securities move higher, which allows lenders to offer lower mortgage rates. As Treasury yields rise, mortgage-backed security prices...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Mortgage Rates: Are We Witnessing a Loan Pricing War?
Call me crazy but I think we've been witnessing a lender price war in the primary mortgage market. Yesterday we talked about lenders "buying the market". ( HERE is an explanation of "buying the market"). I originally described this behavior as "mixed", some lenders were better while others were worse, but then I looked back at my rate tracking spreadsheet and noticed a rotating pattern of aggressive pricing strategies. Of the majors, Wells and GMAC were buying the market last month, Chase and Bank of America had their moment in the sun, and right now I believe Citi might be trying to buy the market. It's almost like they've been taking turns.... It makes sense though. Certain lenders have significantly longer loan processing turn times than others,...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Mortgage Rates Mixed as Lenders Look to Buy the Market Before Pricing Worsens
Mortgage rates generally held steady amidst a shifting investing environment yesterday. I say "generally" because some lenders improved mortgage rates while others moved consumer borrowing costs higher. It may seem odd that two lenders would push mortgage rates in different directions on the same day but it's actually very common. There are several factors that go into the determination of mortgage rates besides the ups and downs of mortgage-backed securities prices. One example of why two similar-sized lenders would be offering different base mortgage rates ( before Loan Level Price Adjustments ) is the amount of new loan applications they have taken in over the past month. If a lender is operating near full capacity, they can slow down production by worsening their loan pricing...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Mortgage Rates Under Pressure Ahead of Corporate Earnings
Hi Everyone! Vic is on vacation so I'll be covering his posts while he is away. The economic calendar was light last week and markets were generally slow as many investors used the holiday shortened work schedule as an excuse to get much needed R&R. While benchmark interest rates were pressured higher by a modest rally in stocks, consumer borrowing costs managed to hold their ground and went into the weekend only a few basis points more expensive vs. the previous Friday. This left the best 30-year fixed conventional mortgage rates in a range between 4.375 and 4.625% (for well-qualified borrowers). Rate increases were only obvious via an uptick in "discount points" charged by lenders. The best day to lock was Wednesday. READ MORE The week ahead offers more in the form of scheduled...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Lenders Reprice for Worse. Mortgage Rates Still Improve
Consumer borrowing costs moved higher yesterday morning but were able to recover from weakness later in the day after stocks experienced a late session sell-off that pushed investor funds back into the bond market. A decline in bond yields led mortgage-backed securities prices higher and allowed lenders to reprice for the better. A flight to safety happens when investors are nervous about owning risky assets like stocks, but do not want to miss out on earning a return on their funds, so they allocate money into risk-free U.S Treasury debt to provide a safe-haven AND an investment return. To remind readers, as benchmark Treasury yields fall, prices of mortgage-backed securities move higher, which allows lenders to offer lower mortgage rates. As Treasury yields rise, mortgage-backed security...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
What Might Move Mortgage Rates in the Days Ahead?
I hope everyone had a safe holiday weekend. U.S. markets were closed yesterday in honor of Independence Day . Banks did not issue rate sheets. The week ahead is one day shorter and several economic releases lighter. Here's a look at what might move mortgage rates in the week ahead . Tomorrow MBA Applications Index (low impact) Thursday Weekly Jobless Claims (low to medium impact) The Treasury Department announces the terms of the 3-year, 10-year notes, and 30 year bond auctions scheduled for next week. (bigger impact next week) Friday Wholesale Trade (low impact) Not much in the way of scheduled data to move the markets this week... Typically, in weeks like this, the bond market and mortgage rates take their directional guidance from the general sentiment of the market. Stock market sentiment...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
How Did The Employment Report Affect Mortgage Rates?
The Bureau of Labor Statistics published the official Employment Situation report this morning. Released on the first Friday of every month, the official Employment Situation report provides an in-depth look at the health of the driving force behind consumer spending: THE LABOR MARKET This report is one of the most influential monthly economic data releases. The market focuses on four specific metrics: Nonfarm Payrolls: totals the number of jobs that were added to or cut from employer payrolls in the prior month. Consensus Forecast: -110,000 jobs vs. +431,000 in April Unemployment Rate: the percentage of working-age, mentally able-Americans who are jobless. Consensus Forecast: 9.8% of the labor force vs. 9.7% last month Average Hourly Earnings: the average amount of earnings per hour of labor...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
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Rates, analysis and mortgage-hunting tips
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