Mortgage Rates Get Some Data to Digest
Posted 03-10-2010 at 07:58 AM by VictorBurek
Not much to recap from yesterday. The prices of mortgage backed securities moved higher following a very strong auction by the Department of Treasury. Demand for the $40billion of 3 year notes posted its highest bid to cover ratio since November. Despite the move higher in price with MBS, lenders left rate sheets unchanged on the day.
This morning the Mortgage Bankers Association released their Weekly Loan Applications Index. The MBA survey covers over 50 percent of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. A rising trend of mortgage applications indicates an increase in home buying interest, a positive for the housing industry and economy as a whole. Furthermore, in a low mortgage rate environment, such a trend implies consumers are seeking out lower monthly payments which can result in increased disposable income and therefore more money to spend on discretionary items or to pay down other debt.
Following several disappointing reports, last week’s Application Index posted a large gain in both purchase and refinance activity. Purchase applications posted a 9% week over week gain while refinance applications increased over 17%. This morning’s release indicated mixed results with purchase applications increasing 5.7% while the refinance activity declined 1.5% during the March 5th week. With last week’s huge 17.2% increase in refinance activity, it isn’t surprising to see a little pull back.
At 1pm, the Department of Treasury will release the results of today’s auction of $21billion of 10 year notes. Strong demand for our nation’s debt is one of several factors that have attributed to record low mortgage rates for the past year or so. If today’s auction is received well, we could see better pricing later today but weak demand will pressure mortgage rates to rise.
Also of relevance today will be testimony from Treasury Secretary Tim Geithner before the House Appropriations Financial Services Committee on the 2011 Treasury budget. Anytime Secretary Geithner speaks, he has the ability to move the markets.
Reports from fellow mortgage professionals indicate lender rate sheets to be similar to yesterday. The par 30 year conventional rate mortgage remains in the 4.75% to 5.00% range for well qualified consumers. To secure a 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.
I still favor locking loans over floating with the same exception as yesterday. If you can float overnight and lock on a shorter lock term tomorrow, I would float. Otherwise, locking now is the wise call. Lenders continue to offer the best rates of 2011 and there is no willingness by market participants to drive interest rates lower.
Today’s 10 year note auction has the biggest chance of moving mortgage rates. If you plan to float, make sure you check out the results shortly after 1pm!
This morning the Mortgage Bankers Association released their Weekly Loan Applications Index. The MBA survey covers over 50 percent of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. A rising trend of mortgage applications indicates an increase in home buying interest, a positive for the housing industry and economy as a whole. Furthermore, in a low mortgage rate environment, such a trend implies consumers are seeking out lower monthly payments which can result in increased disposable income and therefore more money to spend on discretionary items or to pay down other debt.
Following several disappointing reports, last week’s Application Index posted a large gain in both purchase and refinance activity. Purchase applications posted a 9% week over week gain while refinance applications increased over 17%. This morning’s release indicated mixed results with purchase applications increasing 5.7% while the refinance activity declined 1.5% during the March 5th week. With last week’s huge 17.2% increase in refinance activity, it isn’t surprising to see a little pull back.
At 1pm, the Department of Treasury will release the results of today’s auction of $21billion of 10 year notes. Strong demand for our nation’s debt is one of several factors that have attributed to record low mortgage rates for the past year or so. If today’s auction is received well, we could see better pricing later today but weak demand will pressure mortgage rates to rise.
Also of relevance today will be testimony from Treasury Secretary Tim Geithner before the House Appropriations Financial Services Committee on the 2011 Treasury budget. Anytime Secretary Geithner speaks, he has the ability to move the markets.
Reports from fellow mortgage professionals indicate lender rate sheets to be similar to yesterday. The par 30 year conventional rate mortgage remains in the 4.75% to 5.00% range for well qualified consumers. To secure a 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.
I still favor locking loans over floating with the same exception as yesterday. If you can float overnight and lock on a shorter lock term tomorrow, I would float. Otherwise, locking now is the wise call. Lenders continue to offer the best rates of 2011 and there is no willingness by market participants to drive interest rates lower.
Today’s 10 year note auction has the biggest chance of moving mortgage rates. If you plan to float, make sure you check out the results shortly after 1pm!
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