Mortgage Rates Steady Despite Better Employment Data
Posted 11-08-2010 at 08:25 AM by VictorBurek
On Friday we received the most influential data release we get on a monthly basis… the Employment Situation Report. Usually when economic data is better than expected, bonds sell off and stocks rally. Well, Friday’s jobs report showed about 3 times as many jobs created as expected, yet mortgage backed securities held up very well. MBS did move lower and close in the red, but the losses were quite minimal and only a few lenders repriced for the worse; however, lenders did open the day with much weaker rate sheets when compared to the prior day. This is quite common on a Friday, especially when important data is hitting.
We have no data hitting today and not much for the rest of the week. On day’s such as this, it is quite common for the fixed income sector to move in opposite direction of stocks. If stocks rally, bonds and mortgage rates will come under pressure to rise but if stocks sell off, bonds and mortgage rates could improve.
We do have a treasury auction later today. The Department of Treasury will sell $32billion of 3 year notes. Strong demand for our nation’s debt is one of several factors that have attributed to record low mortgage rates. With the recent announcement of QEII, it will be interesting to see the demand from market participants in this week’s auctions. Tomorrow there is an auction of $24billion of 10 year notes and Wednesday we get an auction of $16billion of 30 year bonds. Today’s auction is the least relevant to mortgage rates as the life of a mortgage is much closer to 10 years than 3 years.
Lender rate sheets are very similar to what we had on Friday morning. The par 30 year conventional rate mortgage remains in the 4.00% to 4.25% range for well qualified consumers. Rates below 4% are available with some lenders, but the cost/fee structure only makes sense for consumers keeping the home for more than 5 years. If you are seeking 15 year term, you should expect a par rate in the 3.50% to 3.75% range.
I see no immediate threat of rates rising, so my float boat is at sea.
We have no data hitting today and not much for the rest of the week. On day’s such as this, it is quite common for the fixed income sector to move in opposite direction of stocks. If stocks rally, bonds and mortgage rates will come under pressure to rise but if stocks sell off, bonds and mortgage rates could improve.
We do have a treasury auction later today. The Department of Treasury will sell $32billion of 3 year notes. Strong demand for our nation’s debt is one of several factors that have attributed to record low mortgage rates. With the recent announcement of QEII, it will be interesting to see the demand from market participants in this week’s auctions. Tomorrow there is an auction of $24billion of 10 year notes and Wednesday we get an auction of $16billion of 30 year bonds. Today’s auction is the least relevant to mortgage rates as the life of a mortgage is much closer to 10 years than 3 years.
Lender rate sheets are very similar to what we had on Friday morning. The par 30 year conventional rate mortgage remains in the 4.00% to 4.25% range for well qualified consumers. Rates below 4% are available with some lenders, but the cost/fee structure only makes sense for consumers keeping the home for more than 5 years. If you are seeking 15 year term, you should expect a par rate in the 3.50% to 3.75% range.
I see no immediate threat of rates rising, so my float boat is at sea.
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