Mortgage Rates Get More Data to Digest
Posted 03-12-2010 at 08:34 AM by VictorBurek
Pretty flat day in the interest rates market yesterday. Mortgage backed securities had a brief rally following the final treasury auction for the week. The rally was short lived as MBS quickly gave back the gains and treaded sideways for the remainder of the day closing where they had opened. Lenders held rate sheets unchanged on the day.
The data started this morning with the release of the Retail Sales report. This report shows the monthly change in the total receipts at retail stores. Since consumer spending accounts for a large majority of GDP, market participants track retail sales to gauge economic growth. Last month’s report posted a 0.5% increase following December’s disappointing 0.1% decline. The report indicated Retail Sales for February were much higher than expected. Overall retail sales posted a 0.3% increase and when excluding auto sales, posted a 0.8% increase. January’s report was scaled back from the first reported increase of 0.5% to only a 0.1% increase. Economists had expected a -0.2% decline for the overall and only a 0.1% increase when excluding auto sales due to bad weather across the country. However, it appears the bad weather didn’t keep Americans from shopping.
Next came the release of the Reuter’s/University of Michigan’s Consumer Sentiment Survey where they question 500 households each month on their personal financial conditions and attitude about the economy. An optimistic consumer is more likely to spend which benefits stocks. A pessimistic consumer is more likely to save, which benefits the bond market. The report indicated that consumers are not as optimistic as expected coming in at 72.5 following last month’s 73.6. This is the second month in a row of declining consumer sentiment as consumers are becoming more worried about the troubled labor market.
Following the release of the Retail Sales report, MBS did move considerably lower. The Consumer Sentiment report has helped regain much of the losses; however, many lenders have priced at the lows of the day which has led to worse rate sheets this morning.
Reports from fellow mortgage professionals indicate the par 30 year conventional rate mortgage has risen to the 4.875% to 5.125% range for well qualified consumers. There remains a few lenders still offering 4.75%. 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 costs but you will have to accept a higher interest rate.
Since lenders did price at the lows of the day, I will advice you float for now. If your lender continues to offer 4.75%, than I would lock. If your lender has increased by .125% from yesterday, I would float but check back later as reprices for the better are very likely. If your lender leaves rates unchanged, I would recommend floating over the weekend. I continue to believe 4.75% is the lowest rate we are going to see this year, so if you can lock at that rate, lock and move on.
Have a great weekend, be back to you on Monday.
The data started this morning with the release of the Retail Sales report. This report shows the monthly change in the total receipts at retail stores. Since consumer spending accounts for a large majority of GDP, market participants track retail sales to gauge economic growth. Last month’s report posted a 0.5% increase following December’s disappointing 0.1% decline. The report indicated Retail Sales for February were much higher than expected. Overall retail sales posted a 0.3% increase and when excluding auto sales, posted a 0.8% increase. January’s report was scaled back from the first reported increase of 0.5% to only a 0.1% increase. Economists had expected a -0.2% decline for the overall and only a 0.1% increase when excluding auto sales due to bad weather across the country. However, it appears the bad weather didn’t keep Americans from shopping.
Next came the release of the Reuter’s/University of Michigan’s Consumer Sentiment Survey where they question 500 households each month on their personal financial conditions and attitude about the economy. An optimistic consumer is more likely to spend which benefits stocks. A pessimistic consumer is more likely to save, which benefits the bond market. The report indicated that consumers are not as optimistic as expected coming in at 72.5 following last month’s 73.6. This is the second month in a row of declining consumer sentiment as consumers are becoming more worried about the troubled labor market.
Following the release of the Retail Sales report, MBS did move considerably lower. The Consumer Sentiment report has helped regain much of the losses; however, many lenders have priced at the lows of the day which has led to worse rate sheets this morning.
Reports from fellow mortgage professionals indicate the par 30 year conventional rate mortgage has risen to the 4.875% to 5.125% range for well qualified consumers. There remains a few lenders still offering 4.75%. 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 costs but you will have to accept a higher interest rate.
Since lenders did price at the lows of the day, I will advice you float for now. If your lender continues to offer 4.75%, than I would lock. If your lender has increased by .125% from yesterday, I would float but check back later as reprices for the better are very likely. If your lender leaves rates unchanged, I would recommend floating over the weekend. I continue to believe 4.75% is the lowest rate we are going to see this year, so if you can lock at that rate, lock and move on.
Have a great weekend, be back to you on Monday.
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