Mortgage Rates Hold in the Range
Posted 11-03-2009 at 08:15 AM by VictorBurek
The prices of mortgage backed securities came under some pressure yesterday following several positive economic reports and unexpected strong earnings from Ford. The volume of trading was rather thin, but the losses held until close causing several lenders to reissue new rate sheets increasing consumer borrowing costs.
The economic calendar is very light today. The most significant report being Factory Orders which shows the monthly change in the dollar amount of new orders for both durable and non durable goods. Basically, this report lets market participants know how busy factories will be in the future as they work to fill the orders. Factory orders in August fell 0.8% following July’s 1.4% increase and economists surveyed were expecting a 1.0% increase for September. The release shows that factory orders rose .9% basically in line with expectations.
Today is the first day of the Federal Open Market Committee’s(FOMC) two day meeting where our nation’s monetary policy is set. Not much happens on the first day, but following the conclusion of day two the FOMC releases a statement where they announce any changes to the Fed fund rate and give an outlook on the economy. This statement will be thoroughly scanned by investors for any hints at future monetary policy, the Fed’s outlook on the economy and for any changes to the Quantitative Easing programs that the Fed has in place such as the MBS buying program.
Early reports from fellow mortgage professionals indicate lender rate sheets to be similar to yesterday mornings’. This keeps the par 30 year conventional rate mortgage in the 4.75% to 5.00% range for well qualified consumers. To secure the 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 looking to access home equity, you should expect either a higher interest rate or additional fees.
The first time home buyer tax credit is still set to expire at the end of the month. There has been some talk on Capitol Hill regarding extending the tax credit but nothing has resulted as of yet. If you are looking to take advantage of this up to $8000 tax credit, the clock is ticking. Turn times at lenders have increased due to higher volume of loans as consumers are rushing to beat this deadline, so expect your loan approval to take longer.
Despite MBS holding near the top side of the range, I will continue to caution floating in the near term. We have some high impacting events, NFP and Fed statement, coming this week which can move rates considerably. Always remember, rates move higher faster than they move lower. So consumers closing in the near term have more to risk than to gain by floating.
The economic calendar is very light today. The most significant report being Factory Orders which shows the monthly change in the dollar amount of new orders for both durable and non durable goods. Basically, this report lets market participants know how busy factories will be in the future as they work to fill the orders. Factory orders in August fell 0.8% following July’s 1.4% increase and economists surveyed were expecting a 1.0% increase for September. The release shows that factory orders rose .9% basically in line with expectations.
Today is the first day of the Federal Open Market Committee’s(FOMC) two day meeting where our nation’s monetary policy is set. Not much happens on the first day, but following the conclusion of day two the FOMC releases a statement where they announce any changes to the Fed fund rate and give an outlook on the economy. This statement will be thoroughly scanned by investors for any hints at future monetary policy, the Fed’s outlook on the economy and for any changes to the Quantitative Easing programs that the Fed has in place such as the MBS buying program.
Early reports from fellow mortgage professionals indicate lender rate sheets to be similar to yesterday mornings’. This keeps the par 30 year conventional rate mortgage in the 4.75% to 5.00% range for well qualified consumers. To secure the 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 looking to access home equity, you should expect either a higher interest rate or additional fees.
The first time home buyer tax credit is still set to expire at the end of the month. There has been some talk on Capitol Hill regarding extending the tax credit but nothing has resulted as of yet. If you are looking to take advantage of this up to $8000 tax credit, the clock is ticking. Turn times at lenders have increased due to higher volume of loans as consumers are rushing to beat this deadline, so expect your loan approval to take longer.
Despite MBS holding near the top side of the range, I will continue to caution floating in the near term. We have some high impacting events, NFP and Fed statement, coming this week which can move rates considerably. Always remember, rates move higher faster than they move lower. So consumers closing in the near term have more to risk than to gain by floating.
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