Mortgage Rates Holding as more US Debt Comes to Market
Posted 12-09-2009 at 07:28 AM by VictorBurek
Mortgage backed securities opened up yesterday much higher than the prior day which led to many lenders issuing aggressive rate sheets. After reaching a peak in price in the morning, MBS gradually moved lower erasing the morning gains but still closing higher than the day before. Following the price decline, most lenders did reprice for the worse slightly increasing consumer borrowing costs.
This morning the Mortgage Bankers’ Association released their weekly applications index which tracks the weekly change in the amount of mortgage applications for both purchases and refinances at major lenders. The report showed that purchase activity rose 4.0% following last week’s 4.1% rise. The government stimulus for home buyers continues to assist the housing market’s recovery. The refinance activity posted a healthy 11.1% increase thanks to record low mortgage rates last week.
That is it as far as economic reports but we do have a potentially market mover happening at 1pm eastern today. The U.S. Department of Treasury will hold its second auction of the week offering $21billion of 10 year notes to the highest bidder. Yesterday’s 3 year note auction was received well but the demand was a little less than the prior 3 year note auction. This somewhat disappointing results contributed to the price declines with MBS which I indicated was a possibility on yesterday’s blog. To remind readers, as the price of MBS move lower lenders are forced to offer higher consumer borrowing costs. The same holds true today, a weak auction will pressure rates higher.
Reports from fellow mortgage professionals indicate lender rate sheets to be slightly worse than yesterday mornings. The par 30 year conventional rate mortgage remains in the 4.625% to 4.875% 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. You may elect to pay less in closing costs but you will have to accept a higher interest rate.
This morning the Mortgage Bankers’ Association released their weekly applications index which tracks the weekly change in the amount of mortgage applications for both purchases and refinances at major lenders. The report showed that purchase activity rose 4.0% following last week’s 4.1% rise. The government stimulus for home buyers continues to assist the housing market’s recovery. The refinance activity posted a healthy 11.1% increase thanks to record low mortgage rates last week.
That is it as far as economic reports but we do have a potentially market mover happening at 1pm eastern today. The U.S. Department of Treasury will hold its second auction of the week offering $21billion of 10 year notes to the highest bidder. Yesterday’s 3 year note auction was received well but the demand was a little less than the prior 3 year note auction. This somewhat disappointing results contributed to the price declines with MBS which I indicated was a possibility on yesterday’s blog. To remind readers, as the price of MBS move lower lenders are forced to offer higher consumer borrowing costs. The same holds true today, a weak auction will pressure rates higher.
Reports from fellow mortgage professionals indicate lender rate sheets to be slightly worse than yesterday mornings. The par 30 year conventional rate mortgage remains in the 4.625% to 4.875% 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. You may elect to pay less in closing costs but you will have to accept a higher interest rate.
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