Mortgage Rates Improve After Mubarak Steps Down

Egyptian President Mubarak surprised the world on Friday announcing that he was stepping down as President of Egypt and turning power over to the military. Just a few hours earlier he had announced his intention of remaining President until elections in September. The surprise announcement helped mortgage rates rally as his departure creates uncertainty in the region. As is typical for a Friday, lenders were very slow to pass along the price gains but many lenders did reprice for the better improving consumer borrowing costs.

We have no data hitting the news wires today. On days such as this, the stock market tends to influence mortgage rates. If stocks rise, bonds and mortgage rates could suffer but if stocks sell off, bonds and mortgage rates could improve later today.

The rest of the week is packed with potentially high impacting reports. Tuesday brings us Retail Sales for January and the Empire State Manufacturing Survey. The Retail Sales report is released first and measures consumer spending. Since our economy is driven by consumer spending, this report is considered highly important to market participants. It is expected to show retail sales climbing 0.5% last month. A lower than expected number would be considered favorable to mortgage rates.

Wednesday has three economic releases and the minutes from the last Federal Open Market Committee meeting. The data releases included Housing Starts, Producer Price Index and Industrial Production each of which is considered highly important. With inflation being the talk of the news media, the PPI report may be most important. Higher inflation is the enemy of mortgage rates. Economists are expecting the PPI report to show overall producer prices rose 0.7% last month while the core rate which strips out food and energy is expected to post a 0.2% month over month gain. Higher than expected inflation would be considered bad news for mortgage rates.

Later in the day on Wednesday we get the minutes from the last FOMC meeting. Market participants will scour the minutes for any hint of future monetary policy. Of great importance will be any mention or disagreement with the fed’s current Quantitative Easing program. This report is released at 2pm eastern and can create volatility in late afternoon trading.

Thursday brings us 4 reports, a speech from Ben Bernanke and a treasury announcement regarding the sizes of next week’s debt offerings. The highest impacting report will be the Consumer Price Index which tracks inflationary pressures at the consumer level. Economists are expecting the overall CPI to show prices rose 0.3% in January but the core rate is expected to only show prices less food and energy rose 0.1%. Lower than expected readings would be considered good news for mortgage rates.

We also get weekly Jobless Claims which is expected to show that the number of people who filed for first time claims last week rose from 383,000 to 410,000. At 10am we get Leading Indicators and the Philadelphia Fed Survey.

There is no data on the economic calendar for Friday.

Lender rate sheets are improved from Friday. The par 30 year conventional rate mortgage continues to hold in the 4.875% to 5.125% range for well qualified consumers. To be considered well qualified you must have a FICO credit score of 740 or higher and a loan to value at 80%. To secure a par interest rate you must also be willing to pay all closing costs including an estimated one point loan origination/discount/broker fee. You can always elect to pay less in closing costs but you will have to accept a higher interest rate.

With plenty of high impacting reports coming this week, short term closings should consider locking. Since rate sheets have been issued, MBS have moved higher. So, if locking today hold off until later as lenders may reprice for the better.