Mortgage Rates Have a Positive Day, Finally
Posted 12-30-2009 at 08:16 AM by VictorBurek
After six consecutive days of mortgage rates ticking higher, we finally had a positive day. At the opening bell, mortgage backed securities opened lower but gradually moved higher prior to the auction of 5 year treasury notes. Following the auction which was fairly successful and better than the prior days 2 year auction, the gains in price accelerated which led to many lenders repricing for the better, wooohoooo!
We do not have much data on the news wires this morning. The weekly Mortgage Bankers’ Associations Application Index which we usually get every Wednesday was not released this morning due to their offices being closed for the holidays. The application report will resume January 5th and will include the data for the prior 2 weeks.
The only significant report today was the release of the Chicago PMI. This report is a survey of business conditions in the Chicago region conducted by The Institute of Supply Management each month. Readings above 50 indicate expanding conditions while readings below 50 indicate contraction. Recent readings have shown conditions improving with last month’s survey coming in at 56.1, the highest reading in over a year. Today’s report came in even higher beating economists’ expectations with a reading of 60.0 which is the highest reading since January 2006.
At 1pm eastern, the Department of Treasury will hold its final debt offering for 2009. Today they will offer $32billion of 7 year notes to the highest bidder. Despite record amount of U.S. government borrowing, demand for our nation’s debt has continued to remain strong which is one of many factors that have contributed to the near record low mortgage rates which we have enjoyed for over a year. If the demand at today’s auction is weak, it could pressure the fixed income market down in price which might result in higher mortgage rates.
Reports from fellow mortgage professionals do indicate lender rate sheets to have improved pricing from yesterday’s. The par 30 year conventional rate mortgage remains in the 5.00% to 5.25% range for well qualified consumers with reports of at least one lender offering 4.875%. 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.
If you are still floating a rate, you can lock today and get better pricing than yesterday allowing you to walk away a winner. If you can stomach some risk and can also afford to be wrong, I feel floating until next week is the way to go. Lenders add a cushion to their rate sheets over the holidays and I also feel the recent move lower in price has been overdone and we are due at least some kind of a correction. However, even if we hold steady at the current prices or even move a little lower, the cushion added to rate sheets will go away next week as lenders compete to attract more business. Would love to hear from other mortgage professionals on floating until next week or locking today, please add your comments below.
We do not have much data on the news wires this morning. The weekly Mortgage Bankers’ Associations Application Index which we usually get every Wednesday was not released this morning due to their offices being closed for the holidays. The application report will resume January 5th and will include the data for the prior 2 weeks.
The only significant report today was the release of the Chicago PMI. This report is a survey of business conditions in the Chicago region conducted by The Institute of Supply Management each month. Readings above 50 indicate expanding conditions while readings below 50 indicate contraction. Recent readings have shown conditions improving with last month’s survey coming in at 56.1, the highest reading in over a year. Today’s report came in even higher beating economists’ expectations with a reading of 60.0 which is the highest reading since January 2006.
At 1pm eastern, the Department of Treasury will hold its final debt offering for 2009. Today they will offer $32billion of 7 year notes to the highest bidder. Despite record amount of U.S. government borrowing, demand for our nation’s debt has continued to remain strong which is one of many factors that have contributed to the near record low mortgage rates which we have enjoyed for over a year. If the demand at today’s auction is weak, it could pressure the fixed income market down in price which might result in higher mortgage rates.
Reports from fellow mortgage professionals do indicate lender rate sheets to have improved pricing from yesterday’s. The par 30 year conventional rate mortgage remains in the 5.00% to 5.25% range for well qualified consumers with reports of at least one lender offering 4.875%. 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.
If you are still floating a rate, you can lock today and get better pricing than yesterday allowing you to walk away a winner. If you can stomach some risk and can also afford to be wrong, I feel floating until next week is the way to go. Lenders add a cushion to their rate sheets over the holidays and I also feel the recent move lower in price has been overdone and we are due at least some kind of a correction. However, even if we hold steady at the current prices or even move a little lower, the cushion added to rate sheets will go away next week as lenders compete to attract more business. Would love to hear from other mortgage professionals on floating until next week or locking today, please add your comments below.
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