Mortgage Rates Attempt to Rally but Fizzles
Posted 02-11-2011 at 08:29 AM by VictorBurek
We had a up and down day in the bond market yesterday. Lender rate sheets were slightly worse at the open of trading. As the day moved along, mortgage backed securities began to rally as stocks moved lower which allowed some lenders to reprice for the better. Right at 2pm, we received a report on the U.S. monthly deficit which showed we had a larger deficit in January 2011 then we did in January 2010. Following this report, stocks moved off their lows pulling money away from the bond market forcing the lenders that repriced for the better to send out new rate sheets erasing the improvement.
At the open this morning, MBS are moving higher as stock futures point to a lower open. It appears continued unrest in Egypt is creating a flight to safety trade where investors sell riskier stocks in favor of the relative safety of U.S. Treasuries.
Hopefully, MBS can hold onto and extend these gains throughout the day.
Our lone report for the day was Consumer Sentiment. The Reuter’s/University of Michigan’s Consumer Center surveys 500 households on their attitudes on the economy and personal financial status. Market participants track consumer attitudes to gauge future economic momentum. An optimistic consumer is more likely to spend, this benefits stock markets. A pessimistic consumer is more likely to save, which supports low yields in the bond market. Low yields in the bond market allow lenders to keep mortgage rates low.
We receive two readings each month on Consumer Sentiment, a preliminary reading at the beginning of the month and a final reading. Today’s report is the preliminary look at February sentiment. Economists were expecting an uptick in sentiment to 75.0 from last month’s better than expected print of 74.2. Today’s report indicated preliminary Consumer Sentiment for February came in basically in line with expectations at 75.1. Included within this data is a reading on expected inflation which came in unchanged from last month.
Following the release of the Sentiment report, MBS are extending their morning price gains. The news that inflation expectations held unchanged from the prior month appears to be what is causing the movement. Remember, inflation is the biggest enemy of mortgage rates so any news of less inflation is good news.
Lender rate sheets are improved this morning. The par 30 year conventional rate mortgage remains in the 4.875% to 5.00% range for well qualified consumers. To secure a par interest rate on a conventional mortgage 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.
Today’s rate sheets are the best since Monday. Since rate sheets have been issued, MBS have moved higher following treasuries to lower yields. Some lenders are already in a position to reprice for the better. If closing within the next 2 weeks, you should strongly consider locking later today. The market still seems inclined to take rates higher and today is not a fundamental break of that trend. And recent memory tells us that things can turn very quickly.
At the open this morning, MBS are moving higher as stock futures point to a lower open. It appears continued unrest in Egypt is creating a flight to safety trade where investors sell riskier stocks in favor of the relative safety of U.S. Treasuries.
Hopefully, MBS can hold onto and extend these gains throughout the day.
Our lone report for the day was Consumer Sentiment. The Reuter’s/University of Michigan’s Consumer Center surveys 500 households on their attitudes on the economy and personal financial status. Market participants track consumer attitudes to gauge future economic momentum. An optimistic consumer is more likely to spend, this benefits stock markets. A pessimistic consumer is more likely to save, which supports low yields in the bond market. Low yields in the bond market allow lenders to keep mortgage rates low.
We receive two readings each month on Consumer Sentiment, a preliminary reading at the beginning of the month and a final reading. Today’s report is the preliminary look at February sentiment. Economists were expecting an uptick in sentiment to 75.0 from last month’s better than expected print of 74.2. Today’s report indicated preliminary Consumer Sentiment for February came in basically in line with expectations at 75.1. Included within this data is a reading on expected inflation which came in unchanged from last month.
Following the release of the Sentiment report, MBS are extending their morning price gains. The news that inflation expectations held unchanged from the prior month appears to be what is causing the movement. Remember, inflation is the biggest enemy of mortgage rates so any news of less inflation is good news.
Lender rate sheets are improved this morning. The par 30 year conventional rate mortgage remains in the 4.875% to 5.00% range for well qualified consumers. To secure a par interest rate on a conventional mortgage 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.
Today’s rate sheets are the best since Monday. Since rate sheets have been issued, MBS have moved higher following treasuries to lower yields. Some lenders are already in a position to reprice for the better. If closing within the next 2 weeks, you should strongly consider locking later today. The market still seems inclined to take rates higher and today is not a fundamental break of that trend. And recent memory tells us that things can turn very quickly.
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Several lenders have repriced for the better. The Egyptian President resigned this morning. After the news broke, stocks which were trading lower and moved higher taking money away from bonds. This would be a good time for short term closings to pull the trigger.Posted 02-11-2011 at 10:39 AM by VictorBurek
