Mortgage Rates Rally Following Fed Statement
Posted 09-22-2010 at 08:28 AM by VictorBurek
After last week, yesterday was a very good day for mortgage rates. The day began with lenders passing along improved rate sheets from the prior day, but still worse than the best rates of last week. Following the Fed statement, mortgage backed securities began to rally extending their price gains further. Lenders were hesitate in passing along improvements, but by day’s end all lenders did reprice for the better bringing consumer borrowing costs back to where they were early last week.
Our lone economic report came out early this morning. The Mortgage Bankers Association released their weekly Applications Survey. This data shows the weekly change in the amount of loan applications at major lenders for both purchase loans and refinances. This report has minimal effect on the overall market sentiment. Today’s release indicated that both purchase and refinance activity fell last week. The purchase index fell 3.3% while refinances slipped 0.9% for the third straight decline.
The data picks up tomorrow with the three potentially impactful reports. First will be the weekly jobless claims at 8:30am which is expected to show initial claims holding steady at 450,000. Typically, this report does not have a large impact on the markets unless it varies greatly from expectations. This will be followed with Existing Home Sales and Leading Indicators at 10am. Existing Home sales is expected to show sales of existing homes improving from last month’s 3.83million annualized pace to 4.05million. Last month’s report registered the lowest level of existing home sales in 15 years!
Lender rate sheets are similar to what we had yesterday afternoon. The par 30 year conventional rate mortgage remains in the 4.25% to 4.50% range for well qualified consumers, but there are several lenders offering 4.125% this morning. 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. If you have a lower FICO score or a higher loan to value, you should consider a FHA loan which offers similar rates but with higher closing costs.
If you floated last week when rates started to rise, you were probably kicking yourself that you didn’t lock. Well, we are back to those levels this morning. With that in mind and also recognizing that rates rise faster than the fall, if you are within 15 days of closing you should strongly consider locking today to take advantage of the improved lender pricing. Following the strategy of lock the price highs, float the lows… we are currently in the top half of that range so there is a chance of continued price gains. If you have time and want to gamble, I feel you might be safe to continue to wait.
Our lone economic report came out early this morning. The Mortgage Bankers Association released their weekly Applications Survey. This data shows the weekly change in the amount of loan applications at major lenders for both purchase loans and refinances. This report has minimal effect on the overall market sentiment. Today’s release indicated that both purchase and refinance activity fell last week. The purchase index fell 3.3% while refinances slipped 0.9% for the third straight decline.
The data picks up tomorrow with the three potentially impactful reports. First will be the weekly jobless claims at 8:30am which is expected to show initial claims holding steady at 450,000. Typically, this report does not have a large impact on the markets unless it varies greatly from expectations. This will be followed with Existing Home Sales and Leading Indicators at 10am. Existing Home sales is expected to show sales of existing homes improving from last month’s 3.83million annualized pace to 4.05million. Last month’s report registered the lowest level of existing home sales in 15 years!
Lender rate sheets are similar to what we had yesterday afternoon. The par 30 year conventional rate mortgage remains in the 4.25% to 4.50% range for well qualified consumers, but there are several lenders offering 4.125% this morning. 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. If you have a lower FICO score or a higher loan to value, you should consider a FHA loan which offers similar rates but with higher closing costs.
If you floated last week when rates started to rise, you were probably kicking yourself that you didn’t lock. Well, we are back to those levels this morning. With that in mind and also recognizing that rates rise faster than the fall, if you are within 15 days of closing you should strongly consider locking today to take advantage of the improved lender pricing. Following the strategy of lock the price highs, float the lows… we are currently in the top half of that range so there is a chance of continued price gains. If you have time and want to gamble, I feel you might be safe to continue to wait.
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