Mortgage Rates Unchanged, But Coming Under Pressure
Posted 03-02-2010 at 07:55 AM by VictorBurek
Not much to recap from yesterday. Mortgage backed securities moved higher during the first part of the day, but just after lunch MBS gave back all the early morning gains. Market participants continue to not allow MBS to move higher in price which could lead to lower mortgage rates. All lenders left rate sheets unchanged on the day with par still holding at the lows of 2010.
The only relevant economic data hitting the wires this morning is Motor Vehicle Sales. This data is released throughout the day as car makers release their sales figures for the prior month. Recent reports have shown car sales dipping as many buyers bought last year to take advantage of the Cash For Clunkers program. The only effect this could have on mortgage rates will be reflected in the stock market. Poor sales numbers could cause the stock market to move lower which could allow money to flow into the fixed income sector. This is very unlikely to lower mortgage rates, but could help hold current levels.
We do have a couple Fed officials speaking today. Anytime Fed officials speak, market participants pay attention for any hint at future monetary policy and their economic outlook. At 1pm eastern, Boston Federal Reserve Bank President Eric Rosengren will speak at a conference in Philadelphia on post-crisis capital markets. One hour later, Minneapolis Federal Reserve Bank President Naranyana Kocherlakota will speak to Allied Executives Business and Economic Outlook Symposium in Minneapolis.
Reports from fellow mortgage professionals indicate lender rate sheets to be worse than yesterday thanks to early morning weakness today. The par 30 year conventional rate mortgage remains in the 4.75% to 5.00% range for well qualified consumers. 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 closing costs but you will have to accept a higher interest rate. This is a ideal option for homeowners not planning on keeping your home for more than a few years.
With mortgage rates still holding at the lows of the year, I will continue to advise locking. With the employment numbers coming on Friday, it appears market participants will not allow MBS to move any higher which could lower consumer borrowing costs. If Friday’s jobs numbers are better than expected, you can count on mortgage rates moving higher. You continue to have much more to risk than gain by floating.
The only relevant economic data hitting the wires this morning is Motor Vehicle Sales. This data is released throughout the day as car makers release their sales figures for the prior month. Recent reports have shown car sales dipping as many buyers bought last year to take advantage of the Cash For Clunkers program. The only effect this could have on mortgage rates will be reflected in the stock market. Poor sales numbers could cause the stock market to move lower which could allow money to flow into the fixed income sector. This is very unlikely to lower mortgage rates, but could help hold current levels.
We do have a couple Fed officials speaking today. Anytime Fed officials speak, market participants pay attention for any hint at future monetary policy and their economic outlook. At 1pm eastern, Boston Federal Reserve Bank President Eric Rosengren will speak at a conference in Philadelphia on post-crisis capital markets. One hour later, Minneapolis Federal Reserve Bank President Naranyana Kocherlakota will speak to Allied Executives Business and Economic Outlook Symposium in Minneapolis.
Reports from fellow mortgage professionals indicate lender rate sheets to be worse than yesterday thanks to early morning weakness today. The par 30 year conventional rate mortgage remains in the 4.75% to 5.00% range for well qualified consumers. 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 closing costs but you will have to accept a higher interest rate. This is a ideal option for homeowners not planning on keeping your home for more than a few years.
With mortgage rates still holding at the lows of the year, I will continue to advise locking. With the employment numbers coming on Friday, it appears market participants will not allow MBS to move any higher which could lower consumer borrowing costs. If Friday’s jobs numbers are better than expected, you can count on mortgage rates moving higher. You continue to have much more to risk than gain by floating.
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