Rates Hold Steady Following Fed Statement
Posted 11-05-2009 at 08:09 AM by VictorBurek
At the conclusion of the Federal Open Market Committee’s meeting yesterday, the Fed released their statement on monetary policy and economic outlook. The released offered no surprises as they held the Fed fund rate at its current level and gave a cautiously optimistic outlook on the economy. After some early morning weakness with the prices of mortgage backed securities, following the fed statement MBS regained the early morning losses and closed basically unchanged on the day. However, with the early weakness some lenders did reprice for the worse but a few lenders did reprice later giving back what they took away earlier.
This morning the U.S. Department of Labor released the weekly jobless claims. This data totals the amount of people who filed for first time unemployment benefits in the prior week. As part of this report we get continuing claims which totals the number of Americans that continue to file for benefits due to a lack of finding a new job.
The report shows that fewer Americans than expected filed for unemployment benefits last week. Initial claims dropped by 20,000 to 512,000 which is the fewest since January. The continuing claims also fell more than expected to 5.75million from 5.82million last week but the decline is being attributed to the expiration of benefits. Jobless claims are trending lower helping our economy recover from the worst recession in 70 years. There was no reaction from the markets following this report which isn’t surprising with the Employment Situation report due out tomorrow morning.
The only other economic release today shows us how productive our work force is in our country. If workers are more productive, it keeps wage costs down and helps to fight inflation. The data shows that our nation’s work force was much more productive than expected last month. This is good news for corporate profits but not great news for Americans looking for work. Companies are demanding more productivity from current work force instead of hiring.
Early reports from fellow mortgage professionals indicate that lenders rate sheets are unchanged from yesterday. The par 30 year conventional rate mortgage remains in 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.
With the Employment Situation report due out tomorrow morning at 8:30am eastern, floating is risky. If the report is better than expected, we could see mortgage rates rise quickly. Currently MBS are holding in the middle of the current trading range which I have been using for float/lock recommendation. The range has been our friend and following the strategy of lock at the price highs and float the lows has worked very well over the last few months. The problem with floating into tomorrow’s report is that it is released prior to lenders issuing rate sheets so there is no time to get your loan locked in the morning. If you are closing in the near term, locking today is a safe move.
The Senate voted unanimously yesterday to extend the First Time Home Buyer tax credit through April 30th of 2010. The House of Representatives is expected to vote on the amendment by the end of the week.
On a personal note, I would like to congratulate the New York Yankees and their fans on their World Series victory last night. As a Red Sox fan it pains me to see the Yankees win but they did deserve it this year. Red Sox will be back!
This morning the U.S. Department of Labor released the weekly jobless claims. This data totals the amount of people who filed for first time unemployment benefits in the prior week. As part of this report we get continuing claims which totals the number of Americans that continue to file for benefits due to a lack of finding a new job.
The report shows that fewer Americans than expected filed for unemployment benefits last week. Initial claims dropped by 20,000 to 512,000 which is the fewest since January. The continuing claims also fell more than expected to 5.75million from 5.82million last week but the decline is being attributed to the expiration of benefits. Jobless claims are trending lower helping our economy recover from the worst recession in 70 years. There was no reaction from the markets following this report which isn’t surprising with the Employment Situation report due out tomorrow morning.
The only other economic release today shows us how productive our work force is in our country. If workers are more productive, it keeps wage costs down and helps to fight inflation. The data shows that our nation’s work force was much more productive than expected last month. This is good news for corporate profits but not great news for Americans looking for work. Companies are demanding more productivity from current work force instead of hiring.
Early reports from fellow mortgage professionals indicate that lenders rate sheets are unchanged from yesterday. The par 30 year conventional rate mortgage remains in 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.
With the Employment Situation report due out tomorrow morning at 8:30am eastern, floating is risky. If the report is better than expected, we could see mortgage rates rise quickly. Currently MBS are holding in the middle of the current trading range which I have been using for float/lock recommendation. The range has been our friend and following the strategy of lock at the price highs and float the lows has worked very well over the last few months. The problem with floating into tomorrow’s report is that it is released prior to lenders issuing rate sheets so there is no time to get your loan locked in the morning. If you are closing in the near term, locking today is a safe move.
The Senate voted unanimously yesterday to extend the First Time Home Buyer tax credit through April 30th of 2010. The House of Representatives is expected to vote on the amendment by the end of the week.
On a personal note, I would like to congratulate the New York Yankees and their fans on their World Series victory last night. As a Red Sox fan it pains me to see the Yankees win but they did deserve it this year. Red Sox will be back!
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