Mortgage Market Commentary
Mortgage backed securities (MBS) prices are near unchanged (rates flat) as the prospect of increasing debt sales damp demand for fixed income assets; FNMA 4.5% coupon 102.17bps, +3bps & 4.0% coupon 100.75bps, +3bps. We will be switching the current coupon from 4.5% to 4.0% to better reflect current market conditions. To stem the longest recession since 1930, the U.S. government has spent, lent or guaranteed $12.8 TRILLION, an amount the approaches the value of everything produced in the country or $42,105 for every man, woman and child in the U.S. Case/Shiller Home Price Index tumbled 19% in January from a year earlier, the fastest drop on record as demand plummeted and foreclosures rose. A glut of unsold properties may keep prices low, shrinking household wealth and damping spending. Lower prices and borrowing costs however are attracting some buyers, evidenced by the National Association of Realtors affordability index at record levels. Chicago PMI fell to 31.4, below the consensus forecast, as did Consumer Confidence, which came in at 26. Most economic data in March exceeded expectations, so these reports bucked the trend and quells talk of the economy bottoming out anytime in the near future.
Tuesday, March 31, 2009
Mortgage Rate Advice
Rate Lock Advisory - Monday Mar. 30th
Monday's bond market has opened in positive territory following early stock losses. The stock markets are reacting heavily to the weekend news about GM and Chrysler's bailout requests. The result is the Dow down 283 points while the Nasdaq has lost 51 points. The bond market is currently up 7/32, which will likely improve this morning's mortgage rates by approximately .250 of a discount point.
There is no relevant economic news scheduled for release today. The week brings us the release of only four important reports beginning tomorrow, but three of those four are considered to be very important and one is arguably the single most important data we see each month.
The first is March's Consumer Confidence Index (CCI) late tomorrow morning. This index gives us an indication of consumers' willingness to spend. Bond traders watch this data closely because consumer spending makes up two-thirds of our economy. If this report shows that confidence is falling, it would indicate that consumers are more apt to delay making large purchases. If the report reveals that confidence looks to be growing, we may see bond traders sell, pushing mortgage rates higher tomorrow morning. It is expected to show a reading of 27.0 for March.
The Institute for Supply Management (ISM) will release their manufacturing index late Wednesday morning. This index gives us an important measurement of manufacturer sentiment by surveying trade executives. A reading below 50 means more surveyed executives felt business worsened during the month than those who said it had improved. This month's report is expected to show a reading of 36.0, which would be a slight increase from February's reading of 35.8. This means that analysts think business sentiment remained close to last month's level.
Overall, I expect to see the most movement in rates either Wednesday or Friday. Friday is the most important day of the week with the employment numbers being released, but we will likely see a fair amount of movement in rates Wednesday morning also. This will likely be a fairly active week for mortgage rates, therefore, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Monday's bond market has opened in positive territory following early stock losses. The stock markets are reacting heavily to the weekend news about GM and Chrysler's bailout requests. The result is the Dow down 283 points while the Nasdaq has lost 51 points. The bond market is currently up 7/32, which will likely improve this morning's mortgage rates by approximately .250 of a discount point.
There is no relevant economic news scheduled for release today. The week brings us the release of only four important reports beginning tomorrow, but three of those four are considered to be very important and one is arguably the single most important data we see each month.
The first is March's Consumer Confidence Index (CCI) late tomorrow morning. This index gives us an indication of consumers' willingness to spend. Bond traders watch this data closely because consumer spending makes up two-thirds of our economy. If this report shows that confidence is falling, it would indicate that consumers are more apt to delay making large purchases. If the report reveals that confidence looks to be growing, we may see bond traders sell, pushing mortgage rates higher tomorrow morning. It is expected to show a reading of 27.0 for March.
The Institute for Supply Management (ISM) will release their manufacturing index late Wednesday morning. This index gives us an important measurement of manufacturer sentiment by surveying trade executives. A reading below 50 means more surveyed executives felt business worsened during the month than those who said it had improved. This month's report is expected to show a reading of 36.0, which would be a slight increase from February's reading of 35.8. This means that analysts think business sentiment remained close to last month's level.
Overall, I expect to see the most movement in rates either Wednesday or Friday. Friday is the most important day of the week with the employment numbers being released, but we will likely see a fair amount of movement in rates Wednesday morning also. This will likely be a fairly active week for mortgage rates, therefore, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Monday, March 30, 2009
Mortgage Rates Close to ‘Bottoming,’
Mortgage Rates Close to ‘Bottoming,’ Koskinen Says (Update2)
Share | Email | Print | A A A
By Kim Chipman and Romaine Bostick
March 27 (Bloomberg) -- Mortgage rates are “probably as good as it’s going to get” and the housing market is likely to rebound sooner than some forecasts, Freddie Mac interim Chief Executive Officer John A. Koskinen said.
“Mortgage rates, if they go down at all further, it’s going to be incremental,” Koskinen told reporters today in Washington after he met with President Barack Obama. “Interest rates are probably close to bottoming out, and therefore we are telling people” to buy a house now.
The U.S. 30-year fixed mortgage rate as tracked by Freddie Mac fell to 4.85 percent, the lowest on record, on a government plan to increase purchases of mortgage bonds. The U.S. housing market, the worst since the Great Depression, may improve sooner than some economists’ forecasts as people who had put off home purchases take advantage of a “buyer’s market.”
“This is more attractive than they’ve ever been and about as attractive as they’re ever going to be,” Koskinen said of mortgage rates. ‘We are going to begin to see a lot of home purchases by people on the sidelines who are suddenly discovering ‘hey I can afford a house.’”
Read the entire Mortgage rate article here:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_7KVrbmxVnQ
Share | Email | Print | A A A
By Kim Chipman and Romaine Bostick
March 27 (Bloomberg) -- Mortgage rates are “probably as good as it’s going to get” and the housing market is likely to rebound sooner than some forecasts, Freddie Mac interim Chief Executive Officer John A. Koskinen said.
“Mortgage rates, if they go down at all further, it’s going to be incremental,” Koskinen told reporters today in Washington after he met with President Barack Obama. “Interest rates are probably close to bottoming out, and therefore we are telling people” to buy a house now.
The U.S. 30-year fixed mortgage rate as tracked by Freddie Mac fell to 4.85 percent, the lowest on record, on a government plan to increase purchases of mortgage bonds. The U.S. housing market, the worst since the Great Depression, may improve sooner than some economists’ forecasts as people who had put off home purchases take advantage of a “buyer’s market.”
“This is more attractive than they’ve ever been and about as attractive as they’re ever going to be,” Koskinen said of mortgage rates. ‘We are going to begin to see a lot of home purchases by people on the sidelines who are suddenly discovering ‘hey I can afford a house.’”
Read the entire Mortgage rate article here:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_7KVrbmxVnQ
Mortgage Market Update
Mortgage Market Commentary
The week ahead shapes up as an exciting one for mortgage backed securities (MBS) culminating with the important March Employment report released on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Monday starts off pretty tame, no economic reports due but short term T-bill auctions and a couple of Fed speakers will garner attention. Case-Shiller Home Price Index, Chicago Purchasing Manager Index (PMI) and Consumer Confidence will provide a broad view of the economy on Tuesday. Wednesday brings a slew of information including Mortgage Bankers Association weekly application data, Challenger & ADP Employment figures, ISM Manufacturing Index, Construction Spending and Pending Home Sales, a leading indicator for the housing market. Thursday's most pertinent data are Jobless Claims and Factory Orders. Besides the all important Employment Report on Friday, we also get ISM Services Index plus Fed Chief Bernanke speaking which usually causes a stir. Combine all that with legislative drama, Administation initiatives and global equity concerns PLUS the penultimate trading week before April Conforming MBS "rollover" and this will be an exciting week in the mortgage world!
The week ahead shapes up as an exciting one for mortgage backed securities (MBS) culminating with the important March Employment report released on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Monday starts off pretty tame, no economic reports due but short term T-bill auctions and a couple of Fed speakers will garner attention. Case-Shiller Home Price Index, Chicago Purchasing Manager Index (PMI) and Consumer Confidence will provide a broad view of the economy on Tuesday. Wednesday brings a slew of information including Mortgage Bankers Association weekly application data, Challenger & ADP Employment figures, ISM Manufacturing Index, Construction Spending and Pending Home Sales, a leading indicator for the housing market. Thursday's most pertinent data are Jobless Claims and Factory Orders. Besides the all important Employment Report on Friday, we also get ISM Services Index plus Fed Chief Bernanke speaking which usually causes a stir. Combine all that with legislative drama, Administation initiatives and global equity concerns PLUS the penultimate trading week before April Conforming MBS "rollover" and this will be an exciting week in the mortgage world!
Friday, March 27, 2009
Mortgage Rate Advice
Rate Lock Advisory - Friday Mar. 27th
Friday's bond market has opened relatively flat despite strong stock selling. The Dow is currently down 142 points while the Nasdaq has lost 31 points. The bond market is currently up 2/32, which should improve this morning's mortgage rates by approximately .125 of a discount point compared to yesterday's morning rates.
February's Personal Income & Outlays report was posted early this morning, showing a 0.2% decline in income and a 0.2% rise in spending. Both readings were slightly weaker than forecasts, which is favorable to bonds and mortgage rates. The readings indicate that consumers had less income available to spend than thought last month and it showed in their spending. Since consumer spending makes up two-thirds of the U.S economy, any related data is watched closely.
The intra-month revision to the University of Michigan's Index of Consumer Sentiment showed a reading of 57.3. This was an upward revision to the preliminary reading of 56.6 and a higher reading than what forecasts had called for. That indicates that consumers were a little more confident in their own financial situations than many had thought. However, since this data is only moderately important, its results have not heavily influence this morning's trading or mortgage rates.
Next week is pretty busy in terms of economic releases. There are none scheduled to be posted Monday, but beginning Tuesday we see important data every day including several very important reports. These very important reports include the ISM manufacturing index and the almighty monthly employment report. Look for more details on next week's events in Sunday's weekly preview.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
Massachusetts Mortgage rates are at a 52 year low!
Friday's bond market has opened relatively flat despite strong stock selling. The Dow is currently down 142 points while the Nasdaq has lost 31 points. The bond market is currently up 2/32, which should improve this morning's mortgage rates by approximately .125 of a discount point compared to yesterday's morning rates.
February's Personal Income & Outlays report was posted early this morning, showing a 0.2% decline in income and a 0.2% rise in spending. Both readings were slightly weaker than forecasts, which is favorable to bonds and mortgage rates. The readings indicate that consumers had less income available to spend than thought last month and it showed in their spending. Since consumer spending makes up two-thirds of the U.S economy, any related data is watched closely.
The intra-month revision to the University of Michigan's Index of Consumer Sentiment showed a reading of 57.3. This was an upward revision to the preliminary reading of 56.6 and a higher reading than what forecasts had called for. That indicates that consumers were a little more confident in their own financial situations than many had thought. However, since this data is only moderately important, its results have not heavily influence this morning's trading or mortgage rates.
Next week is pretty busy in terms of economic releases. There are none scheduled to be posted Monday, but beginning Tuesday we see important data every day including several very important reports. These very important reports include the ISM manufacturing index and the almighty monthly employment report. Look for more details on next week's events in Sunday's weekly preview.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
Massachusetts Mortgage rates are at a 52 year low!
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities (MBS) prices gain (rates fall) as stocks globally are lower (DOW down 100) and the Fed prepares to buy notes for a second time this week to hold down borrowing costs; FNMA 4.5% coupon 102.06bps, up 17bps and the high of the session. Personal Income slipped 0.2% in February while Consumer Spending slowed to a 0.2% rise. Firming oil prices did damage to overall inflation, the price gauge tied to spending patterns rose 1.0%. Today's report offers a picture of an economy that remains in recession, while the pace of contraction has eased the consumer is losing ground. Consumer Sentiment edged 0.3% higher to a still severely low level of 56.6 in March. Expectations did rise 2.5% to 53 indicating the pessimism isn't getting worse but the current conditions component fell 3% to 62.3 a reflection of ongoing contraction in the labor market. Rates should improve today as most lenders resisted passing through yesterday's late afternoon gains. As always on a Friday, be watchful of an afternoon sell-off; consider locking off morning pricing.
Massachusetts Mortgage
Mortgage backed securities (MBS) prices gain (rates fall) as stocks globally are lower (DOW down 100) and the Fed prepares to buy notes for a second time this week to hold down borrowing costs; FNMA 4.5% coupon 102.06bps, up 17bps and the high of the session. Personal Income slipped 0.2% in February while Consumer Spending slowed to a 0.2% rise. Firming oil prices did damage to overall inflation, the price gauge tied to spending patterns rose 1.0%. Today's report offers a picture of an economy that remains in recession, while the pace of contraction has eased the consumer is losing ground. Consumer Sentiment edged 0.3% higher to a still severely low level of 56.6 in March. Expectations did rise 2.5% to 53 indicating the pessimism isn't getting worse but the current conditions component fell 3% to 62.3 a reflection of ongoing contraction in the labor market. Rates should improve today as most lenders resisted passing through yesterday's late afternoon gains. As always on a Friday, be watchful of an afternoon sell-off; consider locking off morning pricing.
Massachusetts Mortgage
Mortgage rates at 52-year low!
Mortgage rates at 52-year low
The average 30-year fixed mortgage rate dips to 5.19%, according to a report from Bankrate.com, the lowest rate since 1956.
By Catherine Clifford, CNNMoney.com staff writer
Last Updated: March 26, 2009: 2:38 PM ET
NEW YORK (CNNMoney.com) -- Home mortgage rates dropped to a 52-year low this week, according to a report released Thursday, in the wake of the government's announcement that it will buy more than $1 trillion in debt.
The average 30-year fixed mortgage rate fell to 5.19% this week, down from 5.29% in the week prior, according to Bankrate.com's weekly national survey.
The previous low was 5.28%, hit this January and in June 2003; the last time rates dipped lower than 5.19% was in 1956, according to Bankrate.com.
To put the plunge in mortgage rates into perspective, 30-year fixed home mortgage rates averaged 6.77% in late October. At that time, a $200,000 home loan would have meant a monthly payment of $1,299.86. Now, with the mortgage rates down at 5.19%, the monthly payment for the same loan would be $1,096.99. That works out to a savings of more than $200 per month.
Meanwhile, the average 15-year fixed mortgage rate fell to 4.80% from 4.86% in the the prior week. The 15-year fixed mortgage rate carried an average of 0.49 points.
The government announced last week that it would be buying more than $1 trillion in debt in order to increase liquidity and improve credit conditions. With the key lending rate already at a range of 0% to 0.25%, the Federal Open Market Committee - the policymaking committee of the Fed that sets interest rates - turned to less traditional means to encourage lending.
The Federal Reserve said that it would buy an additional $750 billion in mortgage-backed securities and $300 billion of long-term Treasurys. The so called "quantitative easing" policy essentially increases the money supply and is designed to push interest rates down, making borrowing cheaper.
Not much further to drop: Analysts say that while mortgage rates could edge a smidgen lower, they won't make any more dramatic plunges.
"At this point, what we are going to see is mortgage rates fluctuate at these levels," said Brian Bethune, chief financial analyst at IHS Global Insight. "I don't see them dropping significantly from where they are now."
Mortgage rates move in relation to the yield on the 10-year government bond. While there is not a direct correlation, they do move in the same direction. Bethune said that there are two factors that will prevent Treasury yields, and by extension mortgage rates, from dropping much further.
"One is the huge Treasury borrowing requirements," he said. As the government looks to fund its massive stimulus spending programs, it has had to issue a record amount of debt. The increased supply keeps a lid on the price of bonds and stabilizes yields.
"In addition, as we get closer to perceptions of a trough in the economy, the yields will tend to see upward pressure," said Bethune. Uncle Sam's debt is considered one of the safest places for investors to keep their cash. During times of market uncertainty, demand surges, the prices increase, and yields fall. But as market sentiment begins to believe the economy could be headed for recovery, demand for Treasurys will lessen, lifting yields.
Surge in refinance: The dramatic drop in mortgage rates has motivated home owners to refinance in great numbers, but the drop in mortgage rates has not spurred as large an increase in new home purchases, said Mike Larson, real estate analyst at Weiss Research.
"We are still not seeing a huge impact on home buying," he said. "All else being equal, it will help the market," said Larson. "But it is not the huge impact you are seeing on the refinance side."
Bankrate.com compiles national averages every Wednesday by surveying the top 10 banks and thrifts in the top 10 housing markets. For historical data, Bankrate.com cites the National Bureau of Economic Research.
First Published: March 26, 2009: 12:25 PM ET
Find this article at:
http://money.cnn.com/2009/03/26/real_estate/mortgage_rates/index.htm?section=money_latest
* Please note that if you have a Massachusetts mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
The average 30-year fixed mortgage rate dips to 5.19%, according to a report from Bankrate.com, the lowest rate since 1956.
By Catherine Clifford, CNNMoney.com staff writer
Last Updated: March 26, 2009: 2:38 PM ET
NEW YORK (CNNMoney.com) -- Home mortgage rates dropped to a 52-year low this week, according to a report released Thursday, in the wake of the government's announcement that it will buy more than $1 trillion in debt.
The average 30-year fixed mortgage rate fell to 5.19% this week, down from 5.29% in the week prior, according to Bankrate.com's weekly national survey.
The previous low was 5.28%, hit this January and in June 2003; the last time rates dipped lower than 5.19% was in 1956, according to Bankrate.com.
To put the plunge in mortgage rates into perspective, 30-year fixed home mortgage rates averaged 6.77% in late October. At that time, a $200,000 home loan would have meant a monthly payment of $1,299.86. Now, with the mortgage rates down at 5.19%, the monthly payment for the same loan would be $1,096.99. That works out to a savings of more than $200 per month.
Meanwhile, the average 15-year fixed mortgage rate fell to 4.80% from 4.86% in the the prior week. The 15-year fixed mortgage rate carried an average of 0.49 points.
The government announced last week that it would be buying more than $1 trillion in debt in order to increase liquidity and improve credit conditions. With the key lending rate already at a range of 0% to 0.25%, the Federal Open Market Committee - the policymaking committee of the Fed that sets interest rates - turned to less traditional means to encourage lending.
The Federal Reserve said that it would buy an additional $750 billion in mortgage-backed securities and $300 billion of long-term Treasurys. The so called "quantitative easing" policy essentially increases the money supply and is designed to push interest rates down, making borrowing cheaper.
Not much further to drop: Analysts say that while mortgage rates could edge a smidgen lower, they won't make any more dramatic plunges.
"At this point, what we are going to see is mortgage rates fluctuate at these levels," said Brian Bethune, chief financial analyst at IHS Global Insight. "I don't see them dropping significantly from where they are now."
Mortgage rates move in relation to the yield on the 10-year government bond. While there is not a direct correlation, they do move in the same direction. Bethune said that there are two factors that will prevent Treasury yields, and by extension mortgage rates, from dropping much further.
"One is the huge Treasury borrowing requirements," he said. As the government looks to fund its massive stimulus spending programs, it has had to issue a record amount of debt. The increased supply keeps a lid on the price of bonds and stabilizes yields.
"In addition, as we get closer to perceptions of a trough in the economy, the yields will tend to see upward pressure," said Bethune. Uncle Sam's debt is considered one of the safest places for investors to keep their cash. During times of market uncertainty, demand surges, the prices increase, and yields fall. But as market sentiment begins to believe the economy could be headed for recovery, demand for Treasurys will lessen, lifting yields.
Surge in refinance: The dramatic drop in mortgage rates has motivated home owners to refinance in great numbers, but the drop in mortgage rates has not spurred as large an increase in new home purchases, said Mike Larson, real estate analyst at Weiss Research.
"We are still not seeing a huge impact on home buying," he said. "All else being equal, it will help the market," said Larson. "But it is not the huge impact you are seeing on the refinance side."
Bankrate.com compiles national averages every Wednesday by surveying the top 10 banks and thrifts in the top 10 housing markets. For historical data, Bankrate.com cites the National Bureau of Economic Research.
First Published: March 26, 2009: 12:25 PM ET
Find this article at:
http://money.cnn.com/2009/03/26/real_estate/mortgage_rates/index.htm?section=money_latest
* Please note that if you have a Massachusetts mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Thursday, March 26, 2009
Mortgage Rate Advice
Rate Lock Advisory - Thursday Mar. 26th
Thursday's bond market has opened down slightly with stock posting early gains. The Dow is currently up 34 points while the Nasdaq has gained 23 points. The bond market is currently down 2/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.
The final revision to the 4th Quarter GDP was posted this morning. It showed an annual pace of a 6.3% decline in the GDP during the last three months of the year. This was a little stronger than expected, but was a slight downward revision from last month's previous reading of down 6.2%. It also is the biggest quarterly decline in this reading since 1982. However, this data is quite aged now and has had little impact on this morning's trading.
The Labor Department gave us last week's unemployment claim figures this morning, saying that 652,000 new claims for benefits were filed last week. This was a hair higher than expected, but certainly not enough to influence today's mortgage rates.
Tomorrow morning brings us the release of two relevant reports. The first is February's Personal Income & Outlays report. This data helps us measure consumers' ability to spend and current spending habits, which is important to the mortgage market because of the influence that consumer spending related information has on the financial markets. If a consumer's income is rising, they are more likely to make additional purchases. This raises inflation concerns and has a negative affect on the bond market and mortgage rates. Current forecasts are calling for a 0.1% drop in income and a 0.3% increase in spending.
The second report comes from the University of Michigan at 9:45 AM ET. Their revision to the March consumer sentiment index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. It is expected to show little change from the previous reading that was posted two weeks ago.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Thursday's bond market has opened down slightly with stock posting early gains. The Dow is currently up 34 points while the Nasdaq has gained 23 points. The bond market is currently down 2/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.
The final revision to the 4th Quarter GDP was posted this morning. It showed an annual pace of a 6.3% decline in the GDP during the last three months of the year. This was a little stronger than expected, but was a slight downward revision from last month's previous reading of down 6.2%. It also is the biggest quarterly decline in this reading since 1982. However, this data is quite aged now and has had little impact on this morning's trading.
The Labor Department gave us last week's unemployment claim figures this morning, saying that 652,000 new claims for benefits were filed last week. This was a hair higher than expected, but certainly not enough to influence today's mortgage rates.
Tomorrow morning brings us the release of two relevant reports. The first is February's Personal Income & Outlays report. This data helps us measure consumers' ability to spend and current spending habits, which is important to the mortgage market because of the influence that consumer spending related information has on the financial markets. If a consumer's income is rising, they are more likely to make additional purchases. This raises inflation concerns and has a negative affect on the bond market and mortgage rates. Current forecasts are calling for a 0.1% drop in income and a 0.3% increase in spending.
The second report comes from the University of Michigan at 9:45 AM ET. Their revision to the March consumer sentiment index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. It is expected to show little change from the previous reading that was posted two weeks ago.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Wednesday, March 25, 2009
Mortgage Rate Alerts
Mortgage Rate Alerts
Lock in a Low Mortgage Rate
JUST 3 SIMPLE STEPS
You set your rate and we notify you as soon as it becomes available.
Don't miss your rate again
Lock in a Low Mortgage Rate
JUST 3 SIMPLE STEPS
You set your rate and we notify you as soon as it becomes available.
Don't miss your rate again
Mortgage applications jump; rates at record low
Mortgage Rates article:
Wednesday March 25, 2009, 7:01 am EDT
By Julie Haviv
NEW YORK (Reuters) - U.S. mortgage applications jumped last week as record low interest rates spurred a surge in demand for home refinancing loans, data from an industry group showed on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, increased 32.2 percent to 1,159.4 for the week ended March 20. Refinancing accounted for 78.5 percent of all applications.
Interest rates on mortgages fell after the Federal Reserve last week said it would buy Treasury securities for the first time in more than four decades as well as more than double its planned purchases of mortgage-related securities, according to Orawin Velz, associate vice president of economic forecasting at the MBA in Washington.
"The drop offered a sizable refinance incentive for most homeowners, sparking a pick-up in refinance activity," she said in a statement.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.63 percent, down 0.26 percentage point from the previous week, reaching a record low, the MBA said. It has been conducting the weekly survey since 1990.
Interest rates were well below year-ago levels of 5.74 percent.
Leif Thomsen, chief executive of Mortgage Master in Walpole, Massachusetts, said his company is doing more business now than every before, with just over $1 billion in total mortgage lending since the beginning of the year, 85 percent of which has been in refinancing.
"The housing market is coming back, but not roaring back," he said. "We have gone from a crawl to a brisk walk and we will still have to navigate some pitfalls before we are able to get running again."
The Fed's purchases are part of its ongoing efforts to reduce mortgage rates to stimulate borrowing and boost the U.S. housing market, currently in the throes of the worst downturn since the Great Depression.
However, so far, the low rates have had only a moderate impact on demand for loans to buy homes.
The MBA's seasonally adjusted purchase index rose 4.2 percent to 267.8. The index, however, was 33.7 percent below its year-ago level of 403.7.
Overall mortgage applications last week were 20.0 percent above their year-ago level. The four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was up 13.9 percent.
WEEKLY REFINANCING ACTIVITY SURGES
Mortgage Master, to keep up with sales, has hired over 100 people in the past 90 days alone, Thomsen said.
"There are some fantastic deals out there and as more people begin to realize that, competition will come back and drive a significant amount of activity," he said.
The Mortgage Bankers seasonally adjusted index of refinancing applications surged 41.5 percent to 6,363.2. The index was up 49.5 percent from its year-ago level of 4,255.2.
The refinance share of applications increased to 78.5 percent from 72.9 percent the previous week. The adjustable-rate mortgage share of activity decreased to 1.4 percent in the latest week, down from 2.0 percent the previous week.
Fixed 15-year mortgage rates averaged 4.48 percent, down from 4.52 percent the previous week. Rates on one-year ARMs increased to 6.22 percent from 6.20 percent.
click here for original mortgage artcle
Wednesday March 25, 2009, 7:01 am EDT
By Julie Haviv
NEW YORK (Reuters) - U.S. mortgage applications jumped last week as record low interest rates spurred a surge in demand for home refinancing loans, data from an industry group showed on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, increased 32.2 percent to 1,159.4 for the week ended March 20. Refinancing accounted for 78.5 percent of all applications.
Interest rates on mortgages fell after the Federal Reserve last week said it would buy Treasury securities for the first time in more than four decades as well as more than double its planned purchases of mortgage-related securities, according to Orawin Velz, associate vice president of economic forecasting at the MBA in Washington.
"The drop offered a sizable refinance incentive for most homeowners, sparking a pick-up in refinance activity," she said in a statement.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.63 percent, down 0.26 percentage point from the previous week, reaching a record low, the MBA said. It has been conducting the weekly survey since 1990.
Interest rates were well below year-ago levels of 5.74 percent.
Leif Thomsen, chief executive of Mortgage Master in Walpole, Massachusetts, said his company is doing more business now than every before, with just over $1 billion in total mortgage lending since the beginning of the year, 85 percent of which has been in refinancing.
"The housing market is coming back, but not roaring back," he said. "We have gone from a crawl to a brisk walk and we will still have to navigate some pitfalls before we are able to get running again."
The Fed's purchases are part of its ongoing efforts to reduce mortgage rates to stimulate borrowing and boost the U.S. housing market, currently in the throes of the worst downturn since the Great Depression.
However, so far, the low rates have had only a moderate impact on demand for loans to buy homes.
The MBA's seasonally adjusted purchase index rose 4.2 percent to 267.8. The index, however, was 33.7 percent below its year-ago level of 403.7.
Overall mortgage applications last week were 20.0 percent above their year-ago level. The four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was up 13.9 percent.
WEEKLY REFINANCING ACTIVITY SURGES
Mortgage Master, to keep up with sales, has hired over 100 people in the past 90 days alone, Thomsen said.
"There are some fantastic deals out there and as more people begin to realize that, competition will come back and drive a significant amount of activity," he said.
The Mortgage Bankers seasonally adjusted index of refinancing applications surged 41.5 percent to 6,363.2. The index was up 49.5 percent from its year-ago level of 4,255.2.
The refinance share of applications increased to 78.5 percent from 72.9 percent the previous week. The adjustable-rate mortgage share of activity decreased to 1.4 percent in the latest week, down from 2.0 percent the previous week.
Fixed 15-year mortgage rates averaged 4.48 percent, down from 4.52 percent the previous week. Rates on one-year ARMs increased to 6.22 percent from 6.20 percent.
click here for original mortgage artcle
Mortgage Rate Advice
Rate Lock Advisory - Tuesday Mar. 24th
Tuesday's bond market has opened in negative territory with no relevant data scheduled for release today. The stock markets are showing minor losses compared to yesterday's significant rally with the Dow down 42 points and the Nasdaq down 14 points. The bond market is currently down 9/32, which will likely push this morning's mortgage rates higher by approximately .250 of a discount point.
Today's selling does not completely surprise me. After the size of last week's rally, there is still room for profit taking so that traders can capture the gains from that rally. They also need to prepare for upcoming economic reports, beginning with next week's highly important data. With this being a fairly uneventful week in terms of expected announcements and the level of importance of the economic news on tap, traders are taking the opportunity to reposition their portfolios and prepare for the next few weeks.
There are two reports scheduled for release tomorrow. The first is the week's most important and comes from the Commerce Department. They will release February's Durable Goods Orders early tomorrow morning. This report gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years. This data is known to be volatile from month to month but is still considered to be of high importance. Analysts are expecting it to show a decline in new orders of approximately 2.4%. A smaller decline would be considered a negative for bonds and could lead to higher mortgage rates tomorrow morning.
The second of the day will be released at 10:00 AM ET. February's New Home Sales report is expected to show a small decline in sales of newly constructed homes. But with tomorrow's report covering only approximately 15% of all home sales, its result will likely have less of an impact on mortgage rates than yesterday's Existing Home Sales report did.
Thursday and Friday bring us the release of a couple of moderately important reports. Thursday's final reading to the 4th Quarter GDP will likely not influence trading or mortgage rates much. Friday's Personal Income and Outlays data, along with the revised reading to this month's University of Michigan Index of Consumer Sentiment are a little more important to rates than Thursday's report is, but both are generally considered to be only moderately important. In other words, it will likely take a large variance from forecasts for them cause a noticeable change in mortgage rates.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
Tuesday's bond market has opened in negative territory with no relevant data scheduled for release today. The stock markets are showing minor losses compared to yesterday's significant rally with the Dow down 42 points and the Nasdaq down 14 points. The bond market is currently down 9/32, which will likely push this morning's mortgage rates higher by approximately .250 of a discount point.
Today's selling does not completely surprise me. After the size of last week's rally, there is still room for profit taking so that traders can capture the gains from that rally. They also need to prepare for upcoming economic reports, beginning with next week's highly important data. With this being a fairly uneventful week in terms of expected announcements and the level of importance of the economic news on tap, traders are taking the opportunity to reposition their portfolios and prepare for the next few weeks.
There are two reports scheduled for release tomorrow. The first is the week's most important and comes from the Commerce Department. They will release February's Durable Goods Orders early tomorrow morning. This report gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years. This data is known to be volatile from month to month but is still considered to be of high importance. Analysts are expecting it to show a decline in new orders of approximately 2.4%. A smaller decline would be considered a negative for bonds and could lead to higher mortgage rates tomorrow morning.
The second of the day will be released at 10:00 AM ET. February's New Home Sales report is expected to show a small decline in sales of newly constructed homes. But with tomorrow's report covering only approximately 15% of all home sales, its result will likely have less of an impact on mortgage rates than yesterday's Existing Home Sales report did.
Thursday and Friday bring us the release of a couple of moderately important reports. Thursday's final reading to the 4th Quarter GDP will likely not influence trading or mortgage rates much. Friday's Personal Income and Outlays data, along with the revised reading to this month's University of Michigan Index of Consumer Sentiment are a little more important to rates than Thursday's report is, but both are generally considered to be only moderately important. In other words, it will likely take a large variance from forecasts for them cause a noticeable change in mortgage rates.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
Tuesday, March 24, 2009
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities (MBS) prices are near unchanged (rates flat) as the U.S. prepared the first of three auctions for a record $98 billion of notes. The U.S. will sell $40 billion in 2yr notes today as the administration borrows unprecedented amounts to try and revive the shrinking economy. FNMA 4.5% coupon 101.86bps, -3bps. No major economic data will be released today. Stocks are lower after yesterday's rally, DOW down about 100 points. Money continues to move out of the dollar, the exit reflects concerns over monetary inflation and also increasing demand for risk. Treasury Secretary and Fed Chief Bernanke will be testifying before Congress today. Average 30yr fixed mortgage declined to 4.98%; about 234bps over the 10yr note versus 157bps five years ago.
Mortgage backed securities (MBS) prices are near unchanged (rates flat) as the U.S. prepared the first of three auctions for a record $98 billion of notes. The U.S. will sell $40 billion in 2yr notes today as the administration borrows unprecedented amounts to try and revive the shrinking economy. FNMA 4.5% coupon 101.86bps, -3bps. No major economic data will be released today. Stocks are lower after yesterday's rally, DOW down about 100 points. Money continues to move out of the dollar, the exit reflects concerns over monetary inflation and also increasing demand for risk. Treasury Secretary and Fed Chief Bernanke will be testifying before Congress today. Average 30yr fixed mortgage declined to 4.98%; about 234bps over the 10yr note versus 157bps five years ago.
Monday, March 23, 2009
Mortgage Rate Advice
Rate Lock Advisory - Monday Mar. 23rd
Monday's bond market has opened fairly flat despite an early stock rally. The stock markets are reacting favorably to the release of details of the Fed's plan for relieving banks of their bad holdings in mortgage related securities. The result is the Dow currently up 283 points and the Nasdaq up 52 points. The bond market is nearly unchanged from Friday's close, which will likely keep this morning's mortgage rates close to Friday's levels.
The National Association of Realtors announced late this morning that home resales rose 5.1% last month, greatly exceeding analysts' forecasts. This report was expected to show a small decline in sales, meaning that the housing market was much more active than many had thought. However, offsetting that news was a large decline in sales prices. This means that even though sales activity rebounded, home prices are still falling. Regardless, this data is not considered to be of high importance and therefore has had little impact on this morning's trading or mortgage pricing.
There is no relevant economic data scheduled for release tomorrow. Wednesday's important report comes from the Commerce Department, who will post February's Durable Goods Orders. This report gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years. This data is known to be volatile from month to month but is still considered to be of high importance. Analysts are expecting it to show a decline in new orders of approximately 2.4%. A smaller decline would be considered a negative for bonds and could lead to higher mortgage rates Wednesday morning.
Also scheduled for release Wednesday is February's New Home Sales report. It is expected to show a small decline in sales of newly constructed homes, but some analysts are revising forecasts after seeing this morning's Existing Home figures. But with tomorrow's report covering only approximately 15% of all home sales, its result will likely have less of an impact on mortgage rates than today's data did.
Overall, it is difficult to label one particular day as the most important of the week. The single most important report will likely be tomorrow's Durable Goods Orders, but none of the week's data has the potential to be a major market mover. I would like to say that this may be a relatively calm week for mortgage rates, but as we have seen recently, a lack of important releases does not mean we will not see volatility in the markets and rates. Therefore, I recommend not letting our guard down, particularly if still floating an interest rate.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
Monday's bond market has opened fairly flat despite an early stock rally. The stock markets are reacting favorably to the release of details of the Fed's plan for relieving banks of their bad holdings in mortgage related securities. The result is the Dow currently up 283 points and the Nasdaq up 52 points. The bond market is nearly unchanged from Friday's close, which will likely keep this morning's mortgage rates close to Friday's levels.
The National Association of Realtors announced late this morning that home resales rose 5.1% last month, greatly exceeding analysts' forecasts. This report was expected to show a small decline in sales, meaning that the housing market was much more active than many had thought. However, offsetting that news was a large decline in sales prices. This means that even though sales activity rebounded, home prices are still falling. Regardless, this data is not considered to be of high importance and therefore has had little impact on this morning's trading or mortgage pricing.
There is no relevant economic data scheduled for release tomorrow. Wednesday's important report comes from the Commerce Department, who will post February's Durable Goods Orders. This report gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years. This data is known to be volatile from month to month but is still considered to be of high importance. Analysts are expecting it to show a decline in new orders of approximately 2.4%. A smaller decline would be considered a negative for bonds and could lead to higher mortgage rates Wednesday morning.
Also scheduled for release Wednesday is February's New Home Sales report. It is expected to show a small decline in sales of newly constructed homes, but some analysts are revising forecasts after seeing this morning's Existing Home figures. But with tomorrow's report covering only approximately 15% of all home sales, its result will likely have less of an impact on mortgage rates than today's data did.
Overall, it is difficult to label one particular day as the most important of the week. The single most important report will likely be tomorrow's Durable Goods Orders, but none of the week's data has the potential to be a major market mover. I would like to say that this may be a relatively calm week for mortgage rates, but as we have seen recently, a lack of important releases does not mean we will not see volatility in the markets and rates. Therefore, I recommend not letting our guard down, particularly if still floating an interest rate.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
Friday, March 20, 2009
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities (MBS) prices are near unchanged in quiet trading with no economic data released today; FNMA 4.5% coupon 102.11bps, -3bps. The U.S. will sell a record $94 billion of notes next week as it seeks to fund spending aimed at reviving economic growth. Fed's recently purchased $28 billion MBS, mainly 4.0% & 4.5% coupons, and sold $8 billion of mostly 5.5% & 6.0% coupons in its campaign to lower U.S. home loan rates. With the target rate at 0%, the use of monetary inflation as a policy tool raises the risk price inflation may take off before policy makers can reverse the process. Inflation risk is sweeping commodity prices higher on speculation the Fed's measures will revive the economy; oil traded above $50 a barrel and closed at a 3 month high. Fed Chief Bernanke speaks at 9am pt, always a potential market moving event.
Mortgage backed securities (MBS) prices are near unchanged in quiet trading with no economic data released today; FNMA 4.5% coupon 102.11bps, -3bps. The U.S. will sell a record $94 billion of notes next week as it seeks to fund spending aimed at reviving economic growth. Fed's recently purchased $28 billion MBS, mainly 4.0% & 4.5% coupons, and sold $8 billion of mostly 5.5% & 6.0% coupons in its campaign to lower U.S. home loan rates. With the target rate at 0%, the use of monetary inflation as a policy tool raises the risk price inflation may take off before policy makers can reverse the process. Inflation risk is sweeping commodity prices higher on speculation the Fed's measures will revive the economy; oil traded above $50 a barrel and closed at a 3 month high. Fed Chief Bernanke speaks at 9am pt, always a potential market moving event.
Thursday, March 19, 2009
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities (MBS) prices have held nearly all of the gains from yesterday afternoon's dramatic rally following the Fed's announcement; FNMA 4.5% coupon 102.44bps, -6bps. MBS and Treasury yields plunged yesterday as the Fed surprised investors with additional plans to lower consumer borrowering costs and lift the economy from recession. 10yr note yields tumbled 47bps yesterday, most since 1962, while yields on FNMA 4.5% coupon fell 27bps, widening the spread from 210bps to 230bps, up from an average of 175bps the past decade. The central bank is trying to lower rates by reducing the supply of outstanding mortgage bonds, boosting the prices and thus lowering the yields. Lower mortgage rates by themselves may not be enough to spark demand for home purchases. Slumping stock prices, record foreclosures, falling home prices and job losses are reducing demand for new & existing homes. Consumers are also having difficulty obtaining mortgages as banks tighten lending standards. Jobless claims fell 12k to 646k and the number collecting benefits swelled to a record 5.47 million. The index of leading economic indicators fell in February reflecting worsening conditions and the Philadelphia Fed index at minus 35 showed manufacturing shrank as orders and employment weakened.
Mortgage backed securities (MBS) prices have held nearly all of the gains from yesterday afternoon's dramatic rally following the Fed's announcement; FNMA 4.5% coupon 102.44bps, -6bps. MBS and Treasury yields plunged yesterday as the Fed surprised investors with additional plans to lower consumer borrowering costs and lift the economy from recession. 10yr note yields tumbled 47bps yesterday, most since 1962, while yields on FNMA 4.5% coupon fell 27bps, widening the spread from 210bps to 230bps, up from an average of 175bps the past decade. The central bank is trying to lower rates by reducing the supply of outstanding mortgage bonds, boosting the prices and thus lowering the yields. Lower mortgage rates by themselves may not be enough to spark demand for home purchases. Slumping stock prices, record foreclosures, falling home prices and job losses are reducing demand for new & existing homes. Consumers are also having difficulty obtaining mortgages as banks tighten lending standards. Jobless claims fell 12k to 646k and the number collecting benefits swelled to a record 5.47 million. The index of leading economic indicators fell in February reflecting worsening conditions and the Philadelphia Fed index at minus 35 showed manufacturing shrank as orders and employment weakened.
Mortgage Rate Adisory
Rate Lock Advisory - Wednesday Mar. 18th
WEDNESDAY AFTERNOON UPDATE:
This week's FOMC meeting has adjourned with some extremely favorable news regarding the Fed's investment in Treasury securities and mortgage-related bonds. As expected, there was no change made to key short-term interest rates but the post-meeting statement did mention that economic conditions were worse now than at the time of their last meeting in January. They again mentioned concerns about deflation, meaning inflation is not a threat in their minds.
The big news was the size of the investment that the Fed is going to be making in mortgage-related bonds and securities. In a direct effort to push different interest rates lower, including corporate lending and residential mortgage rates, the central bank will be buying up to $300 billion in longer-term bonds over the next six months. They also said that they plan to purchase $750 billion in mortgage backed securities so free up more capital for mortgage lending. This will likely give the housing and mortgage sectors a much needed boost.
The effect this news had on today's trading was extremely positive for mortgage shoppers. The stock markets have rebounded with the Dow up approximately 50 points and the Nasdaq up 25 points. Both indexes were well in negative territory this morning. The bond market has had an even better reaction to the news. It is currently up a whopping 4 7/32 (135/32) to drive its yield lower by .47%. That is a huge swing and should equate to a very significant improvement to mortgage rates shortly.
Earlier today, the Labor Department gave us the week's most important economic data with the release of February's Consumer Price Index (CPI). It showed a 0.4% rise in the overall reading and a 0.2% increase in the core data reading. Both readings were slightly stronger than expected, indicating prices at the consumer level of the economy were higher than thought. While that is bad news for bonds and mortgage rates because inflation erodes the value of a bond's future fixed interest payments, the market downplayed the data in this morning's trading, looking forward to this afternoon's FOMC results.
The Conference Board will post its Leading Economic Indicators (LEI) for February late tomorrow morning, but I suspect that today's rally and news will carry into tomorrow's morning trading and influence rates more than this report will. The LEI attempts to measure economic activity over the next three to six months. Current forecasts are calling for a 0.6% decline, indicating that economic activity will likely slow in the coming weeks. That would be good news for the bond market and mortgage rates generally speaking, but today's news will probably dominate trading tomorrow regardless of the results of the LEI.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
WEDNESDAY AFTERNOON UPDATE:
This week's FOMC meeting has adjourned with some extremely favorable news regarding the Fed's investment in Treasury securities and mortgage-related bonds. As expected, there was no change made to key short-term interest rates but the post-meeting statement did mention that economic conditions were worse now than at the time of their last meeting in January. They again mentioned concerns about deflation, meaning inflation is not a threat in their minds.
The big news was the size of the investment that the Fed is going to be making in mortgage-related bonds and securities. In a direct effort to push different interest rates lower, including corporate lending and residential mortgage rates, the central bank will be buying up to $300 billion in longer-term bonds over the next six months. They also said that they plan to purchase $750 billion in mortgage backed securities so free up more capital for mortgage lending. This will likely give the housing and mortgage sectors a much needed boost.
The effect this news had on today's trading was extremely positive for mortgage shoppers. The stock markets have rebounded with the Dow up approximately 50 points and the Nasdaq up 25 points. Both indexes were well in negative territory this morning. The bond market has had an even better reaction to the news. It is currently up a whopping 4 7/32 (135/32) to drive its yield lower by .47%. That is a huge swing and should equate to a very significant improvement to mortgage rates shortly.
Earlier today, the Labor Department gave us the week's most important economic data with the release of February's Consumer Price Index (CPI). It showed a 0.4% rise in the overall reading and a 0.2% increase in the core data reading. Both readings were slightly stronger than expected, indicating prices at the consumer level of the economy were higher than thought. While that is bad news for bonds and mortgage rates because inflation erodes the value of a bond's future fixed interest payments, the market downplayed the data in this morning's trading, looking forward to this afternoon's FOMC results.
The Conference Board will post its Leading Economic Indicators (LEI) for February late tomorrow morning, but I suspect that today's rally and news will carry into tomorrow's morning trading and influence rates more than this report will. The LEI attempts to measure economic activity over the next three to six months. Current forecasts are calling for a 0.6% decline, indicating that economic activity will likely slow in the coming weeks. That would be good news for the bond market and mortgage rates generally speaking, but today's news will probably dominate trading tomorrow regardless of the results of the LEI.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
Wednesday, March 18, 2009
Mortgage Market Update
The Mortgage Bankers Association reported Weekly Mortgage Applications this morning. As expected media attention surrounding the Obama Administration's plan to save housing and lower mortgage rates helped to increase borrower's interest in lowering their mortgage payment.
For the week ending March 13 the overall applications market index was up 21.2% to 876.9. Refinance applications were up 29.6% as the MBAA reported the average mortgage rate on a 30 yr loan dropped from 4.96% to 4.89%. Purchase applications were up 1.5%.
Borrowers: If you are waiting around for lower mortgage rates.....4.89% is a record low for this survey.
For the week ending March 13 the overall applications market index was up 21.2% to 876.9. Refinance applications were up 29.6% as the MBAA reported the average mortgage rate on a 30 yr loan dropped from 4.96% to 4.89%. Purchase applications were up 1.5%.
Borrowers: If you are waiting around for lower mortgage rates.....4.89% is a record low for this survey.
Mortgage Rate Advisory
Rate Lock Advisory - Tuesday Mar. 17th
Tuesday's bond market has opened up slightly despite stronger than expected economic news. The stock markets have fluctuated between positive and negative territory during early morning as they look for direction. They are currently showing small gains with the Dow up 20 points and the Nasdaq up 17 points. The bond market is currently up 5/32, which will likely improve this morning's mortgage rates by approximately .125 of a discount point.
Today's big news came from the Labor Department who reported that February's Producer Price Index (PPI) rose only 0.1% compared to a forecast of 0.4%. That was the good news because it means that inflationary pressures at the producer level of the economy were lower than thought. The bad news came from the core reading that excludes more volatile food and energy prices. It was expected to rise only 0.1% last month but actually rose 0.2%. This means that core prices were higher than analysts thought, but fortunately not enough to create a sell atmosphere in the bond market.
February's Housing Starts were also released this morning, revealing an unexpected spike in construction starts of new homes. Today's report showed a 22% jump in starts of new homes when analysts were expecting to see a decline for the ninth consecutive month. This surprise is good news for the housing market, which can be translated as bad news for bonds, but since it is considered one of the less important reports we see each month, its impact on today's trading and mortgage rates has been minimal.
Tomorrow morning brings us the release of February's Consumer Price Index (CPI), which measures inflationary pressures at the very important consumer level of the economy. Its results can definitely have a huge impact on the financial markets, especially long-term securities such as mortgage-related bonds. It is expected to show a 0.3% increase in the overall index and a 0.1% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall tomorrow.
The FOMC meeting that began today and will adjourn at 2:00 PM ET tomorrow. With key short-term interest rates practically at 0% already, there is not much the Fed can do with monetary policy at this meeting. They have previously stated that they expect rates to remain near zero for some time. Therefore, the anxiety of the post-meeting statement should be minimal and the likelihood of a major market reaction to the statement is reduced significantly. If the statement references a time frame of an economic recovery, we may see the markets react if it reveals any surprises. Other than that, I am not expecting too much movement in mortgage rates tomorrow afternoon.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Tuesday's bond market has opened up slightly despite stronger than expected economic news. The stock markets have fluctuated between positive and negative territory during early morning as they look for direction. They are currently showing small gains with the Dow up 20 points and the Nasdaq up 17 points. The bond market is currently up 5/32, which will likely improve this morning's mortgage rates by approximately .125 of a discount point.
Today's big news came from the Labor Department who reported that February's Producer Price Index (PPI) rose only 0.1% compared to a forecast of 0.4%. That was the good news because it means that inflationary pressures at the producer level of the economy were lower than thought. The bad news came from the core reading that excludes more volatile food and energy prices. It was expected to rise only 0.1% last month but actually rose 0.2%. This means that core prices were higher than analysts thought, but fortunately not enough to create a sell atmosphere in the bond market.
February's Housing Starts were also released this morning, revealing an unexpected spike in construction starts of new homes. Today's report showed a 22% jump in starts of new homes when analysts were expecting to see a decline for the ninth consecutive month. This surprise is good news for the housing market, which can be translated as bad news for bonds, but since it is considered one of the less important reports we see each month, its impact on today's trading and mortgage rates has been minimal.
Tomorrow morning brings us the release of February's Consumer Price Index (CPI), which measures inflationary pressures at the very important consumer level of the economy. Its results can definitely have a huge impact on the financial markets, especially long-term securities such as mortgage-related bonds. It is expected to show a 0.3% increase in the overall index and a 0.1% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall tomorrow.
The FOMC meeting that began today and will adjourn at 2:00 PM ET tomorrow. With key short-term interest rates practically at 0% already, there is not much the Fed can do with monetary policy at this meeting. They have previously stated that they expect rates to remain near zero for some time. Therefore, the anxiety of the post-meeting statement should be minimal and the likelihood of a major market reaction to the statement is reduced significantly. If the statement references a time frame of an economic recovery, we may see the markets react if it reveals any surprises. Other than that, I am not expecting too much movement in mortgage rates tomorrow afternoon.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Tuesday, March 17, 2009
Housing Starts Unexpectedly Rebound
The U.S. housing sector showed unexpected strength in February, with housing starts and building permits both rising against expectations for continued declines.
U.S. housing starts rose to an annualized pace of 583k, representing a month-over-month increase of 22.2%, according to the U.S. Department of Commerce on Tuesday morning.
The consensus was looking for starts to decline to 450k. The previous month's reading was revised up to 477k from a previously reported 466k.
Single-family homes - the most important component in the report, accounting for four-fifths of housing starts - rose 1.1% to 357k, compared to the previous month's 353k. The rise comes following decline in the component in 20 of the past 21 months.
Multiple-family homes rose to 226k, compared to the previous month's 124k level.
Meanwhile, building permits rose to 547k in February, up from 531k in January. The consensus was looking for a decline to 500k building permits.
Single-family permits rose 11% in the month to 373k in February from January's 336k. Multiple-family unit permits fell to 174k, up from 195k units in January.
By Stephen Huebl and edited by Megan Ainscow
©CEP News Ltd. 2009
U.S. housing starts rose to an annualized pace of 583k, representing a month-over-month increase of 22.2%, according to the U.S. Department of Commerce on Tuesday morning.
The consensus was looking for starts to decline to 450k. The previous month's reading was revised up to 477k from a previously reported 466k.
Single-family homes - the most important component in the report, accounting for four-fifths of housing starts - rose 1.1% to 357k, compared to the previous month's 353k. The rise comes following decline in the component in 20 of the past 21 months.
Multiple-family homes rose to 226k, compared to the previous month's 124k level.
Meanwhile, building permits rose to 547k in February, up from 531k in January. The consensus was looking for a decline to 500k building permits.
Single-family permits rose 11% in the month to 373k in February from January's 336k. Multiple-family unit permits fell to 174k, up from 195k units in January.
By Stephen Huebl and edited by Megan Ainscow
©CEP News Ltd. 2009
Monday, March 16, 2009
Mortgage Rate Advice
Rate Lock Advisory - Monday Mar. 16th
Monday's bond market has opened flat with the stock markets mixed during early trading. The Dow is currently up 48 points while the Nasdaq has lost 9 points. The bond market is currently nearly unchanged from Friday's close, but we will still likely see an increase in this morning's mortgage rates of approximately .250 of a discount point due to weakness Friday.
Today's only relevant economic news was February's Industrial Production report. It showed a drop in output at U.S. factories, mines and utilities of 1.4% last month. This was a little weaker than expected but indicates that manufacturing activity was slightly softer than thought. That is good news for bonds and mortgage rates, but not enough to spur a bond rally.
The Labor Department will post February's Producer Price Index (PPI) early tomorrow morning. This index measures inflationary pressures at the producer level of the economy. There are two portions of the index- the overall reading and the core data. The core data is more important and watched more closely because it excludes more volatile food and energy prices. If the index shows a large increase, inflation concerns may rise, making long-term investments such as mortgage-related bonds less attractive to investors. This would lead to higher mortgage rates tomorrow morning. Current forecasts are calling for a 0.4% rise in the overall reading and a 0.1% increase in the core data.
Also tomorrow is the release of February's Housing Starts, but it will likely not have much of an impact on mortgage rates. It gives us a measurement of housing sector strength and future mortgage credit demand, but is usually considered to be of low importance to the financial markets. It is expected to show a decline in new starts from January to February.
Overall, look for Wednesday to be the most important day of the week due to the CPI release. Tomorrow may also be an active day for rates with the PPI on tap. But the wildcard is whether stocks continue last week's gains or if they move lower again. Stock strength would likely draw funds from bonds and lead to higher mortgage rates. However, if the major indexes fall again, funds may shift into bonds, leading to lower mortgage rates.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Monday's bond market has opened flat with the stock markets mixed during early trading. The Dow is currently up 48 points while the Nasdaq has lost 9 points. The bond market is currently nearly unchanged from Friday's close, but we will still likely see an increase in this morning's mortgage rates of approximately .250 of a discount point due to weakness Friday.
Today's only relevant economic news was February's Industrial Production report. It showed a drop in output at U.S. factories, mines and utilities of 1.4% last month. This was a little weaker than expected but indicates that manufacturing activity was slightly softer than thought. That is good news for bonds and mortgage rates, but not enough to spur a bond rally.
The Labor Department will post February's Producer Price Index (PPI) early tomorrow morning. This index measures inflationary pressures at the producer level of the economy. There are two portions of the index- the overall reading and the core data. The core data is more important and watched more closely because it excludes more volatile food and energy prices. If the index shows a large increase, inflation concerns may rise, making long-term investments such as mortgage-related bonds less attractive to investors. This would lead to higher mortgage rates tomorrow morning. Current forecasts are calling for a 0.4% rise in the overall reading and a 0.1% increase in the core data.
Also tomorrow is the release of February's Housing Starts, but it will likely not have much of an impact on mortgage rates. It gives us a measurement of housing sector strength and future mortgage credit demand, but is usually considered to be of low importance to the financial markets. It is expected to show a decline in new starts from January to February.
Overall, look for Wednesday to be the most important day of the week due to the CPI release. Tomorrow may also be an active day for rates with the PPI on tap. But the wildcard is whether stocks continue last week's gains or if they move lower again. Stock strength would likely draw funds from bonds and lead to higher mortgage rates. However, if the major indexes fall again, funds may shift into bonds, leading to lower mortgage rates.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities (MBS) prices fell at the opening but have since recovered; FNMA 4.5% coupon 101.13bps, +4bps. Stocks worldwide gained paring demand for the safety of fixed income assets. Today's economic data had little impact; Industrial Production fell in February 1.4% on auto cutbacks and collapsing exports, manufacturing in New York state contracted at the fastest pace on record as orders, sales and inventories plunged, international demand for U.S. securities fell in January reflecting sales of agency debt and China's smallest net purchase since June 2008.
Mortgage backed securities (MBS) prices fell at the opening but have since recovered; FNMA 4.5% coupon 101.13bps, +4bps. Stocks worldwide gained paring demand for the safety of fixed income assets. Today's economic data had little impact; Industrial Production fell in February 1.4% on auto cutbacks and collapsing exports, manufacturing in New York state contracted at the fastest pace on record as orders, sales and inventories plunged, international demand for U.S. securities fell in January reflecting sales of agency debt and China's smallest net purchase since June 2008.
Mortgage Market Commentary
Mortgage Market Commentary
Strong demand for last week's Treasury auctions was a major reason why mortgage rates gained 19bps despite the rising stock market. Investors will be keeping an eye on the level of foreign interest in buying U.S. debt. If demand for U.S. Treasuries falls, then interest rates on mortgages will likely move higher. Today the Treasury International Capital data will offer the latest on foreign demand for U.S. securities, especially the Chinese, the largest holder of U.S. debt, including MBS. The big economic news this week will be the Fed Open Market Committee (FOMC) meeting on Wednesday. Cutting rates is no longer an option, but the Fed may announce additional measures to stimulate the economy. The most significant economic data this week will be the monthly inflation reports; Producer Price Index (PPI) on Tuesday and Consumer Price Index (CPI) on Wednesday. Higher inflation leads to higher mortgage rates. Other reports this week include, Industrial Production on Monday, Housing Starts on Tuesday, Mortgage Bankers Association (MBA) weekly applications on Wednesday and Jobless Claims, Leading Indicators & Philadelphia Fed index on Thursday. Also on Thursday the Treasury announces the amount of 2yr & 5yr notes to be auctioned. Fed Chief Bernanke speaks on Friday, rounding out the week.
Strong demand for last week's Treasury auctions was a major reason why mortgage rates gained 19bps despite the rising stock market. Investors will be keeping an eye on the level of foreign interest in buying U.S. debt. If demand for U.S. Treasuries falls, then interest rates on mortgages will likely move higher. Today the Treasury International Capital data will offer the latest on foreign demand for U.S. securities, especially the Chinese, the largest holder of U.S. debt, including MBS. The big economic news this week will be the Fed Open Market Committee (FOMC) meeting on Wednesday. Cutting rates is no longer an option, but the Fed may announce additional measures to stimulate the economy. The most significant economic data this week will be the monthly inflation reports; Producer Price Index (PPI) on Tuesday and Consumer Price Index (CPI) on Wednesday. Higher inflation leads to higher mortgage rates. Other reports this week include, Industrial Production on Monday, Housing Starts on Tuesday, Mortgage Bankers Association (MBA) weekly applications on Wednesday and Jobless Claims, Leading Indicators & Philadelphia Fed index on Thursday. Also on Thursday the Treasury announces the amount of 2yr & 5yr notes to be auctioned. Fed Chief Bernanke speaks on Friday, rounding out the week.
Friday, March 13, 2009
Market Update
Market Commentary - Fri, Mar 13 - 10:25 AM ET
The New York Federal Reserve said yesterday that it purchased $27B in Mortgage Backed Securities from March 5 through March 11 bringing the total to near $217B since the program began in the beginning of 2009. The Fed aims to lower home loan rates or keep them near their current historic lows through the purchase program in an effort to revive the sagging housing market.
Good news slowly drips into this market as battered financial giant Citigroup said today that the bank will not need additional capital from the government. On Tuesday, it said the first 2 months of 2009 was profitable. Chairman Richard Parsons went on to say that it will stay in the hands of private investors.
The University of Michigan released it consumer sentiment reading today showing that the mood of the US consumer improved in March. The index came in at 56.6 for March when economists were calling for 53.3 and was slightly better than February's 55.0. However, the index of consumers' assessment of current economic conditions fell to 62.3 from 65.5 in February, hitting the lowest since November 2008.
The US trade deficit narrowed in January as imports dropped sharply to its lowest level in more than 6 years. The trade gap fell to $36.0B versus the $38.0B that was expected. The deficit has now dropped 6 months in a row.
The major Stock markets are trading higher again today trying to bring its winning streak to 4 days in a row. Stocks closed higher yesterday for a 3rd straight day, an achievement not seen since late January. The Dow Jones is now trading at 7,193 after hitting a multi-year intraday low of 6,469 on March 6.
Brought to you, courtesy of The Mortgage Market Guide.
The market commentary material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without error.
The New York Federal Reserve said yesterday that it purchased $27B in Mortgage Backed Securities from March 5 through March 11 bringing the total to near $217B since the program began in the beginning of 2009. The Fed aims to lower home loan rates or keep them near their current historic lows through the purchase program in an effort to revive the sagging housing market.
Good news slowly drips into this market as battered financial giant Citigroup said today that the bank will not need additional capital from the government. On Tuesday, it said the first 2 months of 2009 was profitable. Chairman Richard Parsons went on to say that it will stay in the hands of private investors.
The University of Michigan released it consumer sentiment reading today showing that the mood of the US consumer improved in March. The index came in at 56.6 for March when economists were calling for 53.3 and was slightly better than February's 55.0. However, the index of consumers' assessment of current economic conditions fell to 62.3 from 65.5 in February, hitting the lowest since November 2008.
The US trade deficit narrowed in January as imports dropped sharply to its lowest level in more than 6 years. The trade gap fell to $36.0B versus the $38.0B that was expected. The deficit has now dropped 6 months in a row.
The major Stock markets are trading higher again today trying to bring its winning streak to 4 days in a row. Stocks closed higher yesterday for a 3rd straight day, an achievement not seen since late January. The Dow Jones is now trading at 7,193 after hitting a multi-year intraday low of 6,469 on March 6.
Brought to you, courtesy of The Mortgage Market Guide.
The market commentary material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without error.
Thursday, March 12, 2009
Mortgage Rate Update
Rate Lock Advisory - Thursday Mar. 12th
Thursday's bond market has opened flat despite early stock gains and stronger than expected economic news. The Dow is currently up 99 points while the Nasdaq is up 14 points. The bond market is currently up 2/32, but we will likely see an improvement in this morning's mortgage rates of approximately .375 of a discount point due to strength in bonds late yesterday.
The Commerce Department posted February's Retail Sales data this morning, revealing a 0.1% decline in sales. This was stronger than the 0.4% that was expected. Today's release also revised January's sales figures higher 0.8%, meaning that sales at the retail level of the economy were stronger than expected the past two months. That is considered to be bad news for the bond market and mortgage rates, but the market seems to be shrugging off the data.
Also this morning, the Labor Department announced that 654,000 new claims for benefits were filed last week. This was a little higher than expected, but this weekly report usually does not carry much influence on the markets and mortgage rates unless it varies greatly from forecasts.
The 30-year Bond auction is being held today. Results will be posted at 1:00 PM, as yesterday's 10-year Note sale. Yesterday's sale was met with a strong demand from investors, which helped rally bonds during afternoon trading. The 10-year Note is more relevant to mortgage rates than the 30-year Bond, but a weak or strong sale today can lead to selling to selling or buying of bonds on a broader scale. So, if we get another strong interest in the sale, we may see bonds rally again this afternoon.
There are two economic reports scheduled to be posted tomorrow morning. The first is the release of January's Goods and Services Trade Balance. This report gives us the size of the U.S. trade deficit. It is the week's least important piece of news and likely will not influence mortgage rates much. It is expected to show a trade deficit of $38.2 billion.
The second report of the morning is the University of Michigan's Index of Consumer Sentiment for March at 9:45 AM. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates. If the index rises, indicating that confidence is rising and spending will likely rise, we may see mortgage rates move higher late tomorrow morning. It is expected to show a reading of 56.3.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Thursday's bond market has opened flat despite early stock gains and stronger than expected economic news. The Dow is currently up 99 points while the Nasdaq is up 14 points. The bond market is currently up 2/32, but we will likely see an improvement in this morning's mortgage rates of approximately .375 of a discount point due to strength in bonds late yesterday.
The Commerce Department posted February's Retail Sales data this morning, revealing a 0.1% decline in sales. This was stronger than the 0.4% that was expected. Today's release also revised January's sales figures higher 0.8%, meaning that sales at the retail level of the economy were stronger than expected the past two months. That is considered to be bad news for the bond market and mortgage rates, but the market seems to be shrugging off the data.
Also this morning, the Labor Department announced that 654,000 new claims for benefits were filed last week. This was a little higher than expected, but this weekly report usually does not carry much influence on the markets and mortgage rates unless it varies greatly from forecasts.
The 30-year Bond auction is being held today. Results will be posted at 1:00 PM, as yesterday's 10-year Note sale. Yesterday's sale was met with a strong demand from investors, which helped rally bonds during afternoon trading. The 10-year Note is more relevant to mortgage rates than the 30-year Bond, but a weak or strong sale today can lead to selling to selling or buying of bonds on a broader scale. So, if we get another strong interest in the sale, we may see bonds rally again this afternoon.
There are two economic reports scheduled to be posted tomorrow morning. The first is the release of January's Goods and Services Trade Balance. This report gives us the size of the U.S. trade deficit. It is the week's least important piece of news and likely will not influence mortgage rates much. It is expected to show a trade deficit of $38.2 billion.
The second report of the morning is the University of Michigan's Index of Consumer Sentiment for March at 9:45 AM. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates. If the index rises, indicating that confidence is rising and spending will likely rise, we may see mortgage rates move higher late tomorrow morning. It is expected to show a reading of 56.3.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities (MBS) prices are trading near the high of the session; FNMA 4.5% coupon 101.19bps, +21bps. Treasuries and MBS rose (rates fell) after results from 30yr bond auction showed stronger demand than expected. Stock markets are also higher by 3%, indicating "new" money has entered the market. The Fed purchased $61 billion MBS, mostly 4.5% coupons, and sold $34 billion MBS, mostly higher coupons.
Mortgage backed securities (MBS) prices are trading near the high of the session; FNMA 4.5% coupon 101.19bps, +21bps. Treasuries and MBS rose (rates fell) after results from 30yr bond auction showed stronger demand than expected. Stock markets are also higher by 3%, indicating "new" money has entered the market. The Fed purchased $61 billion MBS, mostly 4.5% coupons, and sold $34 billion MBS, mostly higher coupons.
Great Article on Bloomberg
Lock in Mortgage Rate Before It’s Too Late: Jane Bryant Quinn
Share | Email | Print | A A A
Commentary by Jane Bryant Quinn
March 11 (Bloomberg) -- So who is actually getting some?
I mean those beautiful fixed-rate mortgages advertised at 5.5 percent or less. Maybe, in a virtual world, an avatar can drop into a virtual bank and close a loan at that rate, but here in real life, achieving it is close to a miracle.
You might get 5.5 percent if you put 20 percent down, borrow $417,000 or less, boast a high credit score (730 to 750, out of 850 total, as determined by your credit history), carry low debt relative to your reliable income (confirmed by two years’ worth of tax returns and probably not counting bonuses), buy in an area where home prices are relatively stable (wherever that is) and use a community bank, not a national bank.
If you slip even a little bit on any of the criteria above, you will be charged a higher interest rate and higher fees, as well. Mortgages are far more expensive than they appear, especially for people borrowing large amounts or trying to refinance.
To start with, none of the easy, bubble mortgages are around anymore. No “stated income” loans where you don’t have to document your earnings. No option adjustable-rate mortgages, where you could choose to pay less than the interest due. Virtually no piggyback loans, where the lender supplies a first and second mortgage in the same package, up to 100 percent of the purchase price. You might still get an interest-only loan, but it’s not cheap.
Fannie, Freddie
The principal actors in the market today are the nationalized housing-finance companies, Fannie Mae and Freddie Mac, which purchase mortgage loans. In third place stands the Federal Housing Administration, which insures loans originated by private lenders. All together, the government sector accounts for 87 percent of the mortgages currently being made, says Guy Cecala, chief executive officer and publisher of Inside Mortgage Finance Publications in Bethesda, Maryland. Purely private financing is expensive and scarce.
The government backs only loans of a certain size, known as conforming loans. The lowest available interest rate is generally on a traditional Fannie or Freddie mortgage for as much as $417,000, with a higher limit in Alaska, Hawaii, Guam and the U.S. Virgin Islands. Next step up would be a jumbo conforming loan of as much as $729,750, available in the most expensive counties in the U.S. and costing anywhere from a quarter point to a full percentage point more.
And that’s just for starters. Fannie and Freddie add a quarter-point “adverse market delivery charge” because of declining home prices. They have also initiated “risk-based pricing,” which raises fees on people with less than a perfect borrowing profile. You will pay more if your credit score falls below about 720, you are buying a condominium or you are putting less than 15 percent down.
Prohibitive Fees
“You might qualify for a mortgage, technically, but the interest rate and fees may make it prohibitive to take,” Cecala says. Loans larger than the Fannie/Freddie limits, booked by private lenders, might cost 2 percentage points over the conforming rate. On refinancing, the fees can eat up any monthly savings you expected.
Another cost is private mortgage insurance, which you need if you put less than 20 percent down. Premiums are up, in most parts of the country, and the lenders are restricting coverage in various ways. For example, PMI Group in Walnut Creek, California, won’t insure cash-out refinances, second homes or investment properties. In Florida, it won’t touch attached housing such as condominiums. MGIC Investment Corp. in Milwaukee, Wisconsin, stopped insuring second-home loans this week.
Higher Down Payments
Mortgage insurance is scarce for buyers who want to put only 5 percent down. In declining housing markets, meaning practically all of them, the insurers might want 10 percent or 15 percent down. Genworth Financial Inc., based in Richmond, Virginia, demands credit scores of 720 and up in the most bruising markets -- Arizona, California, Florida and Nevada.
Cash-poor borrowers are turning to the FHA, which accepts down payments as low as 3.5 percent. Not surprisingly, the FHA accounted for 31 percent of the market at the end of 2008 compared with 2 percent in 2006.
Still, these loans aren’t cheap. You pay an upfront mortgage insurance premium of 1.75 percent, which can be tacked on to the loan, plus a monthly premium tied to the size of your down payment. Interest-rate quotes vary tremendously, says mortgage expert Jack Guttentag, founder of the Web site mtgprofessor.com and professor of finance emeritus at the Wharton School of the University of Pennsylvania. Some lenders mark up their FHA loans much more than others. It’s hard to know if you’re getting a good price.
Lock Interest Rate
Only loans for veterans, insured by the U.S. Veterans Affairs Department, and U.S. Agriculture Department loans in rural areas require no down payment and no mortgage insurance.
It’s taking longer to close a loan. Lenders, burned by their own sloppy practices, have gone back to checking what you say on the application and that takes time. For example, they are routinely checking your income claims against your tax return, says Jim Pair, president-elect of the National Association of Mortgage Brokers.
Once you strike a deal on a mortgage, protect yourself by locking up the interest rate for the length of time it will probably take for the loan to close. Rates can change as much as a quarter-point in a single day. Don’t accept a verbal lock, Guttentag warns. Get it in writing, with rate, points and fees disclosed. A broker might say you are locked, in hope of nipping a higher fee if rates decline. If he or she is wrong, you are the one who pays.
(Jane Bryant Quinn, a leading personal finance writer and author of “Smart and Simple Financial Strategies for Busy People,” is a Bloomberg News columnist. She is a director of Bloomberg LP, parent of Bloomberg News. The opinions expressed are her own.)
To contact the writer of this column: Jane Bryant Quinn in New York at jbquinn@bloomberg.net
Last Updated: March 11, 2009 00:01 EDT
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Share | Email | Print | A A A
Commentary by Jane Bryant Quinn
March 11 (Bloomberg) -- So who is actually getting some?
I mean those beautiful fixed-rate mortgages advertised at 5.5 percent or less. Maybe, in a virtual world, an avatar can drop into a virtual bank and close a loan at that rate, but here in real life, achieving it is close to a miracle.
You might get 5.5 percent if you put 20 percent down, borrow $417,000 or less, boast a high credit score (730 to 750, out of 850 total, as determined by your credit history), carry low debt relative to your reliable income (confirmed by two years’ worth of tax returns and probably not counting bonuses), buy in an area where home prices are relatively stable (wherever that is) and use a community bank, not a national bank.
If you slip even a little bit on any of the criteria above, you will be charged a higher interest rate and higher fees, as well. Mortgages are far more expensive than they appear, especially for people borrowing large amounts or trying to refinance.
To start with, none of the easy, bubble mortgages are around anymore. No “stated income” loans where you don’t have to document your earnings. No option adjustable-rate mortgages, where you could choose to pay less than the interest due. Virtually no piggyback loans, where the lender supplies a first and second mortgage in the same package, up to 100 percent of the purchase price. You might still get an interest-only loan, but it’s not cheap.
Fannie, Freddie
The principal actors in the market today are the nationalized housing-finance companies, Fannie Mae and Freddie Mac, which purchase mortgage loans. In third place stands the Federal Housing Administration, which insures loans originated by private lenders. All together, the government sector accounts for 87 percent of the mortgages currently being made, says Guy Cecala, chief executive officer and publisher of Inside Mortgage Finance Publications in Bethesda, Maryland. Purely private financing is expensive and scarce.
The government backs only loans of a certain size, known as conforming loans. The lowest available interest rate is generally on a traditional Fannie or Freddie mortgage for as much as $417,000, with a higher limit in Alaska, Hawaii, Guam and the U.S. Virgin Islands. Next step up would be a jumbo conforming loan of as much as $729,750, available in the most expensive counties in the U.S. and costing anywhere from a quarter point to a full percentage point more.
And that’s just for starters. Fannie and Freddie add a quarter-point “adverse market delivery charge” because of declining home prices. They have also initiated “risk-based pricing,” which raises fees on people with less than a perfect borrowing profile. You will pay more if your credit score falls below about 720, you are buying a condominium or you are putting less than 15 percent down.
Prohibitive Fees
“You might qualify for a mortgage, technically, but the interest rate and fees may make it prohibitive to take,” Cecala says. Loans larger than the Fannie/Freddie limits, booked by private lenders, might cost 2 percentage points over the conforming rate. On refinancing, the fees can eat up any monthly savings you expected.
Another cost is private mortgage insurance, which you need if you put less than 20 percent down. Premiums are up, in most parts of the country, and the lenders are restricting coverage in various ways. For example, PMI Group in Walnut Creek, California, won’t insure cash-out refinances, second homes or investment properties. In Florida, it won’t touch attached housing such as condominiums. MGIC Investment Corp. in Milwaukee, Wisconsin, stopped insuring second-home loans this week.
Higher Down Payments
Mortgage insurance is scarce for buyers who want to put only 5 percent down. In declining housing markets, meaning practically all of them, the insurers might want 10 percent or 15 percent down. Genworth Financial Inc., based in Richmond, Virginia, demands credit scores of 720 and up in the most bruising markets -- Arizona, California, Florida and Nevada.
Cash-poor borrowers are turning to the FHA, which accepts down payments as low as 3.5 percent. Not surprisingly, the FHA accounted for 31 percent of the market at the end of 2008 compared with 2 percent in 2006.
Still, these loans aren’t cheap. You pay an upfront mortgage insurance premium of 1.75 percent, which can be tacked on to the loan, plus a monthly premium tied to the size of your down payment. Interest-rate quotes vary tremendously, says mortgage expert Jack Guttentag, founder of the Web site mtgprofessor.com and professor of finance emeritus at the Wharton School of the University of Pennsylvania. Some lenders mark up their FHA loans much more than others. It’s hard to know if you’re getting a good price.
Lock Interest Rate
Only loans for veterans, insured by the U.S. Veterans Affairs Department, and U.S. Agriculture Department loans in rural areas require no down payment and no mortgage insurance.
It’s taking longer to close a loan. Lenders, burned by their own sloppy practices, have gone back to checking what you say on the application and that takes time. For example, they are routinely checking your income claims against your tax return, says Jim Pair, president-elect of the National Association of Mortgage Brokers.
Once you strike a deal on a mortgage, protect yourself by locking up the interest rate for the length of time it will probably take for the loan to close. Rates can change as much as a quarter-point in a single day. Don’t accept a verbal lock, Guttentag warns. Get it in writing, with rate, points and fees disclosed. A broker might say you are locked, in hope of nipping a higher fee if rates decline. If he or she is wrong, you are the one who pays.
(Jane Bryant Quinn, a leading personal finance writer and author of “Smart and Simple Financial Strategies for Busy People,” is a Bloomberg News columnist. She is a director of Bloomberg LP, parent of Bloomberg News. The opinions expressed are her own.)
To contact the writer of this column: Jane Bryant Quinn in New York at jbquinn@bloomberg.net
Last Updated: March 11, 2009 00:01 EDT
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Wednesday, March 11, 2009
Mortgage Rate Lock Advice
Rate Lock Advisory - Wednesday Mar. 11th
Wednesday's bond market has opened down slightly with no relevant economic news and only small gains in stocks. The Dow is currently up 20 points while the Nasdaq has gained 6 points. The bond market is currently down 4/32, which should keep this morning's mortgage near yesterday's levels.
There is no relevant economic data scheduled for release again today. Tomorrow brings us the first relevant data of the week. The 10-year Note sale is being held today while the 30-year Bond auction will be done tomorrow. Results will be posted at 1:00 PM each day. It is fairly common to see weakness in bonds right before the sales as trading firms prepare for them. If the auctions are met with a strong demand, that weakness is usually erased almost immediately. Therefore, is today's sale is met with a strong demand, we may see movement in bonds and rates this afternoon.
February's Retail Sales data will be released tomorrow morning. This report is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the financial markets. This month's report is expected to show a decline in sales of approximately 0.4%. If it reveals a larger decline in sales, the bond market should rise and mortgage rates will likely fall. If it reveals an increase, I expect to see bond prices fall and mortgage rates rise tomorrow morning.
We also will get weekly unemployment claims from the Labor Department tomorrow morning. They are expected to say that 640,000 new claims for benefits were filed last week. This would be little change from the previous week's total, but this data is not nearly important as the sales data is and will likely have little impact on the markets or rates.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Wednesday's bond market has opened down slightly with no relevant economic news and only small gains in stocks. The Dow is currently up 20 points while the Nasdaq has gained 6 points. The bond market is currently down 4/32, which should keep this morning's mortgage near yesterday's levels.
There is no relevant economic data scheduled for release again today. Tomorrow brings us the first relevant data of the week. The 10-year Note sale is being held today while the 30-year Bond auction will be done tomorrow. Results will be posted at 1:00 PM each day. It is fairly common to see weakness in bonds right before the sales as trading firms prepare for them. If the auctions are met with a strong demand, that weakness is usually erased almost immediately. Therefore, is today's sale is met with a strong demand, we may see movement in bonds and rates this afternoon.
February's Retail Sales data will be released tomorrow morning. This report is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the financial markets. This month's report is expected to show a decline in sales of approximately 0.4%. If it reveals a larger decline in sales, the bond market should rise and mortgage rates will likely fall. If it reveals an increase, I expect to see bond prices fall and mortgage rates rise tomorrow morning.
We also will get weekly unemployment claims from the Labor Department tomorrow morning. They are expected to say that 640,000 new claims for benefits were filed last week. This would be little change from the previous week's total, but this data is not nearly important as the sales data is and will likely have little impact on the markets or rates.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Tuesday, March 10, 2009
Daily Mortgage Rate Lock Advice
Rate Lock Advisory - Tuesday Mar. 10th
Tuesday's bond market has opened in negative territory with stocks rallying behind favorable earnings news from Citigroup. The Dow is currently up 254 points while the Nasdaq has gained 60 points. The bond market is currently down 24/32, but I am expecting to see an increase in this morning's mortgage rates of approximately .125 - .250 of a discount point.
The news that banking giant Citigroup was profitable the first two months of the year has led to rally in many sectors that have been hit hard due to economic and stability news. Whether or not this rally is the beginning reversal for stocks or if this is just a good day in a bad quarter remains to be seen. It will be interesting to see if the major indexes can hold this morning's gains during afternoon trading and over the next few days. If not, look for more selling in stocks that could benefit bonds and mortgage rates. However, if they continue to rise, we may see pressure in bonds that lead to higher mortgage rates in the near future.
There is no relevant economic data scheduled for release again today. The rest of the week brings us the release of three economic reports for the bond and mortgage markets to digest along with 10-year Treasury Note and 30 year Bond auctions. The first will be held tomorrow with results posted at 1:00 PM. It is fairly common to see weakness in bonds right before the sales as trading firms prepare for them. If the auctions are met with a strong demand, that weakness is usually erased almost immediately.
The most important of the three reports will be posted Thursday morning when February's Retail Sales data is released. This report is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the financial markets. This month's report is expected to show a decline in sales of approximately 0.4%. If it reveals a larger decline in sales, the bond market should rise and mortgage rates will likely fall. If it reveals an increase, I expect to see bond prices fall and mortgage rates rise Thursday morning.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Tuesday's bond market has opened in negative territory with stocks rallying behind favorable earnings news from Citigroup. The Dow is currently up 254 points while the Nasdaq has gained 60 points. The bond market is currently down 24/32, but I am expecting to see an increase in this morning's mortgage rates of approximately .125 - .250 of a discount point.
The news that banking giant Citigroup was profitable the first two months of the year has led to rally in many sectors that have been hit hard due to economic and stability news. Whether or not this rally is the beginning reversal for stocks or if this is just a good day in a bad quarter remains to be seen. It will be interesting to see if the major indexes can hold this morning's gains during afternoon trading and over the next few days. If not, look for more selling in stocks that could benefit bonds and mortgage rates. However, if they continue to rise, we may see pressure in bonds that lead to higher mortgage rates in the near future.
There is no relevant economic data scheduled for release again today. The rest of the week brings us the release of three economic reports for the bond and mortgage markets to digest along with 10-year Treasury Note and 30 year Bond auctions. The first will be held tomorrow with results posted at 1:00 PM. It is fairly common to see weakness in bonds right before the sales as trading firms prepare for them. If the auctions are met with a strong demand, that weakness is usually erased almost immediately.
The most important of the three reports will be posted Thursday morning when February's Retail Sales data is released. This report is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the financial markets. This month's report is expected to show a decline in sales of approximately 0.4%. If it reveals a larger decline in sales, the bond market should rise and mortgage rates will likely fall. If it reveals an increase, I expect to see bond prices fall and mortgage rates rise Thursday morning.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities (MBS) prices are trading at the low of the day, FNMA 4.5% coupon 100.95bps, down 22bps. Unfavorable repricing is possible. The higher coupons (6% & 6.5%) are actually outperforming the lower coupons (4.0% & 4.5%). FNMA 6.5% coupon +6bps while the FNMA 4.0% coupon -31bps. 30yr fixed mortgage rates at 4.5% seem so far away now.
Mortgage backed securities (MBS) prices are trading at the low of the day, FNMA 4.5% coupon 100.95bps, down 22bps. Unfavorable repricing is possible. The higher coupons (6% & 6.5%) are actually outperforming the lower coupons (4.0% & 4.5%). FNMA 6.5% coupon +6bps while the FNMA 4.0% coupon -31bps. 30yr fixed mortgage rates at 4.5% seem so far away now.
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities (MBS) prices fell (rates higher) before the first of three Treasury auctions this week that will raise $63 billion as concern over unprecedented levels of U.S. borrowing and rising stocks reduced demand for the relative safety of fixed income assets. FNMA 4.5% coupon 101.05bps, down 12bps. Investors fear the steps to stem the slump in growth and unclog the credit markets will bust the bust, leading to higher inflation. No economic data is scheduled for release today. Bernanke urges a sweeping overhaul of financial regulations in an effort to smooth out the boom and bust cycles in financial markets. The DOW is up 250 points this morning, apparently approving of Bernanke's comments. FYI, 3 month Libor rate is 1.33%, the highest level in two months. Treasury auction results at 10 am pt.
Mortgage backed securities (MBS) prices fell (rates higher) before the first of three Treasury auctions this week that will raise $63 billion as concern over unprecedented levels of U.S. borrowing and rising stocks reduced demand for the relative safety of fixed income assets. FNMA 4.5% coupon 101.05bps, down 12bps. Investors fear the steps to stem the slump in growth and unclog the credit markets will bust the bust, leading to higher inflation. No economic data is scheduled for release today. Bernanke urges a sweeping overhaul of financial regulations in an effort to smooth out the boom and bust cycles in financial markets. The DOW is up 250 points this morning, apparently approving of Bernanke's comments. FYI, 3 month Libor rate is 1.33%, the highest level in two months. Treasury auction results at 10 am pt.
Daily Mortgage Rate Lock Advice
Rate Lock Advisory - Monday Mar. 9th
Monday's bond market has opened in negative territory following early stock gains. However, stocks have given back those gains to currently stand close to Friday's closing levels. The Dow is currently up 4 points while the Nasdaq is nearly unchanged. The bond market is currently down 9/32, which will likely push this morning's mortgage rates higher by approximately .125 - .250 of a discount point.
There is no relevant economic data scheduled for release today. The rest of the week brings us the release of three economic releases for the bond and mortgage markets to digest along with 10-year Treasury Note and 30 year Bond auctions. All of the data will be posted the latter part of the week. Only one of the three reports is considered to be of high importance to the markets, but this does not mean that we can expect to see a quiet week in mortgage rates. We could very well see the most movement in rates the latter part of the week, but rates are likely to move several days this week.
The most important of the three reports will be posted Thursday morning when February's Retail Sales data is released. This report is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the financial markets. This month's report is expected to show a decline in sales of approximately 0.4%. If it reveals a larger decline in sales, the bond market should rise and mortgage rates will likely fall. If it reveals an increase, I expect to see bond prices fall and mortgage rates rise Thursday morning.
Overall, it will likely be another active week in the mortgage market. Thursday will probably be the most important day of the week with the Retail Sales report due. The 10-year Treasury Note auction is scheduled for Wednesday while the 30-year bond sale will be held Thursday. Results of both sales will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading, however, weak demand could lead to selling and an increase to mortgage rates. But I am expecting to see the most movement in rates the latter part of the week regardless of the auction results.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Monday's bond market has opened in negative territory following early stock gains. However, stocks have given back those gains to currently stand close to Friday's closing levels. The Dow is currently up 4 points while the Nasdaq is nearly unchanged. The bond market is currently down 9/32, which will likely push this morning's mortgage rates higher by approximately .125 - .250 of a discount point.
There is no relevant economic data scheduled for release today. The rest of the week brings us the release of three economic releases for the bond and mortgage markets to digest along with 10-year Treasury Note and 30 year Bond auctions. All of the data will be posted the latter part of the week. Only one of the three reports is considered to be of high importance to the markets, but this does not mean that we can expect to see a quiet week in mortgage rates. We could very well see the most movement in rates the latter part of the week, but rates are likely to move several days this week.
The most important of the three reports will be posted Thursday morning when February's Retail Sales data is released. This report is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the financial markets. This month's report is expected to show a decline in sales of approximately 0.4%. If it reveals a larger decline in sales, the bond market should rise and mortgage rates will likely fall. If it reveals an increase, I expect to see bond prices fall and mortgage rates rise Thursday morning.
Overall, it will likely be another active week in the mortgage market. Thursday will probably be the most important day of the week with the Retail Sales report due. The 10-year Treasury Note auction is scheduled for Wednesday while the 30-year bond sale will be held Thursday. Results of both sales will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading, however, weak demand could lead to selling and an increase to mortgage rates. But I am expecting to see the most movement in rates the latter part of the week regardless of the auction results.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Monday, March 9, 2009
Mortgage Market Commentary
Mortgage Market Commentary
This week the Economic Calendar has a light schedule as the the U.S. prepares to sell $63 billion in notes/bonds and investors speculate whether the central bank will buy government debt in an effort to reduce consumer borrowing costs. Last week mortgage backed securities (MBS) prices rose almost a full point (rates improved) as money flowed out of the stock market into fixed income assets; DOW lost nearly 700 points. No economic data will be released on Monday. Report on Wholesale Inventories is due Tuesday along with a Fed Chief Bernanke speech. Wednesday the Mortgage Bankers Weekly activity for purchase and refinance applications is released. Thursday's Retail Sales report will be the primary economic data for the week. Jobless Claims and Business Inventories completes the days information. Friday has Import Prices, Trade Balance and Consumer Sentiment for investors to digest before the weekend. Treasury auctions on Tuesday (3yr note), Wednesday (10yr note) and Thursday (30yr bond) can inluence MBS prices this week. Traders will focus not only on the yields but also the demand for the debt. A drop in demand can signal a increasing rate enviroment.
Morning Quote
FNMA-30 4.5% coupon 101.11 (DOWN 14 BPs from prior close) Pricing May Worsen!
This week the Economic Calendar has a light schedule as the the U.S. prepares to sell $63 billion in notes/bonds and investors speculate whether the central bank will buy government debt in an effort to reduce consumer borrowing costs. Last week mortgage backed securities (MBS) prices rose almost a full point (rates improved) as money flowed out of the stock market into fixed income assets; DOW lost nearly 700 points. No economic data will be released on Monday. Report on Wholesale Inventories is due Tuesday along with a Fed Chief Bernanke speech. Wednesday the Mortgage Bankers Weekly activity for purchase and refinance applications is released. Thursday's Retail Sales report will be the primary economic data for the week. Jobless Claims and Business Inventories completes the days information. Friday has Import Prices, Trade Balance and Consumer Sentiment for investors to digest before the weekend. Treasury auctions on Tuesday (3yr note), Wednesday (10yr note) and Thursday (30yr bond) can inluence MBS prices this week. Traders will focus not only on the yields but also the demand for the debt. A drop in demand can signal a increasing rate enviroment.
Morning Quote
FNMA-30 4.5% coupon 101.11 (DOWN 14 BPs from prior close) Pricing May Worsen!
Friday, March 6, 2009
Mortgage Rate Advisory
Rate Lock Advisory - Friday Mar. 6th
Friday's bond market has opened in positive territory after this morning's major economic news failed to hurt the recent enthusiasm in bonds. The stock markets are in negative ground, but were showing strong gains during early trading. The Dow is currently down 19 points while the Nasdaq has lost 12 points as the opening rally has fizzled. The bond market is currently up 5/32, which with yesterday's gains should improve this morning's mortgage rates by approximately .375 of a discount point.
The Labor Department reported this morning that the unemployment rate spiked to a 25-year high of 8.1% last month. This was higher than the 7.9% rate that was expected, which can be considered good news for bonds. The reports also revealed that 651,000 jobs were lost during the month, but that was very close to forecasts. It also revised February's job loss higher by 57,000 jobs. The hourly earnings reading matched forecasts of a 0.2% increase.
Overall, the unemployment rate was an attention magnet, but the other portions of the report are a non-factor in this morning's trading and mortgage rates. The early rise then fall in stocks indicates that further weakness in them could be likely. That may benefit bonds as investors seek shelter from the volatility. However, if stocks can hold any type of a rally, the bond market could see considerable weakness, likely driving mortgage rates higher.
Next week is pretty light in terms of economic releases. There are only a couple of relevant reports scheduled to be posted, but one of them is highly important. None of the relevant news will be posted until mid-week, so look for a relative calm day for mortgage rates Monday unless the stock markets rally or sell-off again. Sunday's weekly preview will have more details on next week's events.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Friday's bond market has opened in positive territory after this morning's major economic news failed to hurt the recent enthusiasm in bonds. The stock markets are in negative ground, but were showing strong gains during early trading. The Dow is currently down 19 points while the Nasdaq has lost 12 points as the opening rally has fizzled. The bond market is currently up 5/32, which with yesterday's gains should improve this morning's mortgage rates by approximately .375 of a discount point.
The Labor Department reported this morning that the unemployment rate spiked to a 25-year high of 8.1% last month. This was higher than the 7.9% rate that was expected, which can be considered good news for bonds. The reports also revealed that 651,000 jobs were lost during the month, but that was very close to forecasts. It also revised February's job loss higher by 57,000 jobs. The hourly earnings reading matched forecasts of a 0.2% increase.
Overall, the unemployment rate was an attention magnet, but the other portions of the report are a non-factor in this morning's trading and mortgage rates. The early rise then fall in stocks indicates that further weakness in them could be likely. That may benefit bonds as investors seek shelter from the volatility. However, if stocks can hold any type of a rally, the bond market could see considerable weakness, likely driving mortgage rates higher.
Next week is pretty light in terms of economic releases. There are only a couple of relevant reports scheduled to be posted, but one of them is highly important. None of the relevant news will be posted until mid-week, so look for a relative calm day for mortgage rates Monday unless the stock markets rally or sell-off again. Sunday's weekly preview will have more details on next week's events.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities prices (MBS) fell, then rebounded (rates rose) and stocks advanced after release of the Employment report showed the economy lost 651k jobs in February, December and January figures were revised lower and the Unemployment Rate jumped to 8.1%; highest in 25 years. FNMA 4.5% coupon 101.19bps, 1bps. Traders return focus to the continuous battle between weak economic data that should push rates lower and lingering supply concerns pulling rates higher. The economy may need additional federal measures to help stop the worst recession since WWII. The flight to quality and risk reduction trade is overwhelmed by the announcement of further Treasury borrowings.
Mortgage backed securities prices (MBS) fell, then rebounded (rates rose) and stocks advanced after release of the Employment report showed the economy lost 651k jobs in February, December and January figures were revised lower and the Unemployment Rate jumped to 8.1%; highest in 25 years. FNMA 4.5% coupon 101.19bps, 1bps. Traders return focus to the continuous battle between weak economic data that should push rates lower and lingering supply concerns pulling rates higher. The economy may need additional federal measures to help stop the worst recession since WWII. The flight to quality and risk reduction trade is overwhelmed by the announcement of further Treasury borrowings.
Thursday, March 5, 2009
Market Update
Market Commentary - Thu, Mar 05 - 9:55 AM ET
General Motors was dealt a serious blow today as auditors for the company said that Chapter 11 bankruptcy may be forthcoming if the car maker is unsuccessful in negotiating concessions from its creditors and the UAW. GM has until March 31 to obtain these concessions and demonstrate to the government that by restructuring their operations they can once again be a successful auto manufacturer. Shares of GM were down almost 92% from last year this time.
Weekly Jobless Claims fell by 31,000 to 639,000 claims while the four-week moving average for new claims increased to 641,750, its highest level in just over 26 years. Continuing Claims remained over the 5 million mark with the four-week moving average for those claims growing by 76,750 to 5.01 million, a record high reaching back to 1967.
Retailers reported that February sales were a little better than January as Wal-Mart's gains were much better than expected. Limited Brands, which operates Victoria's Secret and Bath and Body Works, posted a decline of 7% - analysts expected a drop of 7.1%. Stage Stores said same-store sales fell 8.6%, less than the -9.3% expected.
The volatility in the Equity markets continues today as stocks are trading lower after rising yesterday, which followed 5 straight days of losses. The meltdown left the major indices at levels not seen in more than a decade. The Dow Jones Industrial Average closed at 6,875.84. The S&P 500 settled at 712.87. The Dow's record high close was 14,164.53 achieved on October 9, 2007, while the S&P hit a record 1,565.15 on the same day.
Brought to you, courtesy of The Mortgage Market Guide.
The market commentary material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without error.
General Motors was dealt a serious blow today as auditors for the company said that Chapter 11 bankruptcy may be forthcoming if the car maker is unsuccessful in negotiating concessions from its creditors and the UAW. GM has until March 31 to obtain these concessions and demonstrate to the government that by restructuring their operations they can once again be a successful auto manufacturer. Shares of GM were down almost 92% from last year this time.
Weekly Jobless Claims fell by 31,000 to 639,000 claims while the four-week moving average for new claims increased to 641,750, its highest level in just over 26 years. Continuing Claims remained over the 5 million mark with the four-week moving average for those claims growing by 76,750 to 5.01 million, a record high reaching back to 1967.
Retailers reported that February sales were a little better than January as Wal-Mart's gains were much better than expected. Limited Brands, which operates Victoria's Secret and Bath and Body Works, posted a decline of 7% - analysts expected a drop of 7.1%. Stage Stores said same-store sales fell 8.6%, less than the -9.3% expected.
The volatility in the Equity markets continues today as stocks are trading lower after rising yesterday, which followed 5 straight days of losses. The meltdown left the major indices at levels not seen in more than a decade. The Dow Jones Industrial Average closed at 6,875.84. The S&P 500 settled at 712.87. The Dow's record high close was 14,164.53 achieved on October 9, 2007, while the S&P hit a record 1,565.15 on the same day.
Brought to you, courtesy of The Mortgage Market Guide.
The market commentary material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without error.
Daily Rate Lock Advisory
Rate Lock Advisory - Thursday Mar. 5th
Thursday's bond market has opened strong following early stock weakness. The major stock indexes are showing significant losses after yesterday's rally. The Dow is currently down 230 points while the Nasdaq is down 42 points. The bond market is currently up 34/32, but we will likely see an improvement in this morning's mortgage rates of only .125 - .250 of a discount point.
This morning's economic news gave us results that were not favorable to bonds and mortgage rates. The Productivity revision revealed a much lower level of worker output than was expected. Today's report showed a decline in output of 0.4% compared to the increase of 1.0% that was forecasted and the 3.2% gain that was estimated last month. It also showed a significant upward revision to the Unit Labor Costs portion of the report that raises wage inflation concerns. Even though this report is of medium importance to the markets, the revised readings are somewhat surprising.
The second report of the morning wasn't much better either. The Commerce Department reported that Factory Orders fell 1.9% in January. This was stronger than analysts' revised forecasts of a 3.5% decline, but today's reports also revised December's orders lower by 1.0%. That seemed to have offset the higher than expected reading, but this report is also considered to be of medium importance so its impact has been relatively minimal.
The Labor Department reported that 639,000 new claims for benefits were filed last week. This was lower than expected and a decline from the previous week's total.
Tomorrow morning brings us February's Employment report at 8:30 AM ET tomorrow. Some of the important portions of the report will give us the unemployment rate, number of new jobs added or lost and the average hourly earnings reading. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a large drop in payrolls and little or no increase in earnings. Current forecasts are calling for 0.3% increase in the unemployment rate to 7.9% and approximately 650,000 jobs lost during the month.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Thursday's bond market has opened strong following early stock weakness. The major stock indexes are showing significant losses after yesterday's rally. The Dow is currently down 230 points while the Nasdaq is down 42 points. The bond market is currently up 34/32, but we will likely see an improvement in this morning's mortgage rates of only .125 - .250 of a discount point.
This morning's economic news gave us results that were not favorable to bonds and mortgage rates. The Productivity revision revealed a much lower level of worker output than was expected. Today's report showed a decline in output of 0.4% compared to the increase of 1.0% that was forecasted and the 3.2% gain that was estimated last month. It also showed a significant upward revision to the Unit Labor Costs portion of the report that raises wage inflation concerns. Even though this report is of medium importance to the markets, the revised readings are somewhat surprising.
The second report of the morning wasn't much better either. The Commerce Department reported that Factory Orders fell 1.9% in January. This was stronger than analysts' revised forecasts of a 3.5% decline, but today's reports also revised December's orders lower by 1.0%. That seemed to have offset the higher than expected reading, but this report is also considered to be of medium importance so its impact has been relatively minimal.
The Labor Department reported that 639,000 new claims for benefits were filed last week. This was lower than expected and a decline from the previous week's total.
Tomorrow morning brings us February's Employment report at 8:30 AM ET tomorrow. Some of the important portions of the report will give us the unemployment rate, number of new jobs added or lost and the average hourly earnings reading. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a large drop in payrolls and little or no increase in earnings. Current forecasts are calling for 0.3% increase in the unemployment rate to 7.9% and approximately 650,000 jobs lost during the month.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities (MBS) prices continue to trade higher (rates lower) in front of the employment report due out Friday, FNMA 4.5% coupon 101.16bps, +53bps and the high of the session. If you have been floating and received favorable repricing this afternoon, strongly consider locking your short term closings. With the recent rally in price, a not completely devastating jobs number will likely lead to a good old fashioned Friday sell-off.
Mortgage backed securities (MBS) prices continue to trade higher (rates lower) in front of the employment report due out Friday, FNMA 4.5% coupon 101.16bps, +53bps and the high of the session. If you have been floating and received favorable repricing this afternoon, strongly consider locking your short term closings. With the recent rally in price, a not completely devastating jobs number will likely lead to a good old fashioned Friday sell-off.
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities (MBS) prices are higher (rates lower) on weakness in the stock market and speculation central banks may increase asset purchases after the Bank of England said it would buy long term bonds after cutting rates 50bps. Stronger demand for MBS leads to lower rates. FNMA 4.5% coupon 100.83bps, +20bps. U.S. jobless claims decreased to 639k from a 26 year high the prior week. U.S. worker productivity in the 4th quarter fell for the first time in a year as output dropped even faster than companies cut jobs and hours. Unit labor costs climbed 5.7%, indicating companies will keep cutting jobs to contain escalating losses. The faltering labor market has caused consumer sentiment to plummet and crippled spending. The Treasury will announce the amount of 3yr, 10yr & 30yr notes it will sell next week later today and the Fed details its most recent MBS purchases too; SUPPLY & DEMAND!
Mortgage backed securities (MBS) prices are higher (rates lower) on weakness in the stock market and speculation central banks may increase asset purchases after the Bank of England said it would buy long term bonds after cutting rates 50bps. Stronger demand for MBS leads to lower rates. FNMA 4.5% coupon 100.83bps, +20bps. U.S. jobless claims decreased to 639k from a 26 year high the prior week. U.S. worker productivity in the 4th quarter fell for the first time in a year as output dropped even faster than companies cut jobs and hours. Unit labor costs climbed 5.7%, indicating companies will keep cutting jobs to contain escalating losses. The faltering labor market has caused consumer sentiment to plummet and crippled spending. The Treasury will announce the amount of 3yr, 10yr & 30yr notes it will sell next week later today and the Fed details its most recent MBS purchases too; SUPPLY & DEMAND!
Wednesday, March 4, 2009
Special Report
Special Report
Updated Housing Plan
03/04/2009
Today the Treasury Department released the details and guidelines of the Obama Administration’s Housing Plan which is being called “Making Home Affordable”
The following links will provide you with direct access to read the Treasury Department’s release:
Click here for the summary
Click here for the Housing Fact Sheet
Click here for Modification Guidelines
Updated Housing Plan
03/04/2009
Today the Treasury Department released the details and guidelines of the Obama Administration’s Housing Plan which is being called “Making Home Affordable”
The following links will provide you with direct access to read the Treasury Department’s release:
Click here for the summary
Click here for the Housing Fact Sheet
Click here for Modification Guidelines
Mortgage Rate Lock Advisory
Rate Lock Advisory - Wednesday Mar. 4th
Wednesday's bond market has opened well into negative territory following a strong opening in stocks. The stock markets are rallying with the Dow up 150 points and the Nasdaq up 32 points. The bond market is currently down 28/32, which will likely push this morning's mortgage rates higher by approximately .125 - .250 of a discount point.
There were no important economic reports scheduled for release this morning. The Fed will release its Beige Book at 2:00 PM ET today. This report details economic activity throughout the country by region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading tomorrow. It probably will not cause a major sell off in the stock or bond markets, but could cause enough movement in bond prices to possibly improve or worsen mortgage rates slightly if it reveals any significant surprises.
There are two important reports scheduled for release tomorrow morning. The first is the revised Productivity index for the 4th Quarter of last year. The preliminary reading posted last month showed a 3.2% increase in worker output. Analysts are expecting to see a sizable downward revision to the initial reading. It is expected to be cut to a 1.6% increase in output, meaning workers were not as productive as previously thought during the quarter. The Unit Labor Costs reading is expected to be revised higher to 3.4%. Employee productivity and costs are watched fairy closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns, while increases in employee costs do raise inflation fears.
January's Factory Orders will be posted late tomorrow morning, which will give us a measurement of manufacturing sector strength. This data is similar to last week's Durable Goods, except this report covers orders for both durable and non-durable goods. Current forecasts are calling for a drop in new orders of approximately 2.1%. A larger than expected drop would be good news for the bond market and could lead to an improvement in mortgage rates.
We also will get weekly unemployment numbers from the Labor Department, but I am not expecting them to heavily influence bond trading or mortgage rates.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Massachusetts Mortgage borrowers should contact me for details.
Wednesday's bond market has opened well into negative territory following a strong opening in stocks. The stock markets are rallying with the Dow up 150 points and the Nasdaq up 32 points. The bond market is currently down 28/32, which will likely push this morning's mortgage rates higher by approximately .125 - .250 of a discount point.
There were no important economic reports scheduled for release this morning. The Fed will release its Beige Book at 2:00 PM ET today. This report details economic activity throughout the country by region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading tomorrow. It probably will not cause a major sell off in the stock or bond markets, but could cause enough movement in bond prices to possibly improve or worsen mortgage rates slightly if it reveals any significant surprises.
There are two important reports scheduled for release tomorrow morning. The first is the revised Productivity index for the 4th Quarter of last year. The preliminary reading posted last month showed a 3.2% increase in worker output. Analysts are expecting to see a sizable downward revision to the initial reading. It is expected to be cut to a 1.6% increase in output, meaning workers were not as productive as previously thought during the quarter. The Unit Labor Costs reading is expected to be revised higher to 3.4%. Employee productivity and costs are watched fairy closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns, while increases in employee costs do raise inflation fears.
January's Factory Orders will be posted late tomorrow morning, which will give us a measurement of manufacturing sector strength. This data is similar to last week's Durable Goods, except this report covers orders for both durable and non-durable goods. Current forecasts are calling for a drop in new orders of approximately 2.1%. A larger than expected drop would be good news for the bond market and could lead to an improvement in mortgage rates.
We also will get weekly unemployment numbers from the Labor Department, but I am not expecting them to heavily influence bond trading or mortgage rates.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Massachusetts Mortgage borrowers should contact me for details.
Mortgage Market Commentary
Mortgage Market Commentary
Mortgage backed securities prices are lower (rates higher) this morning as stocks rose around the world and traders increased concern supply is overwhelming demand leading to higher rates. FNMA 4.5% coupon 100.55bps, down 20bps and the low of the session. U.S. service sector shrank further in February as job losses sapped consumer confidence and spending. The service sector represents about 80% of U.S. economic activity. The Mortgage Bankers Association weekly purchase index fell 6% & refinancing index decreased 15% coinciding with 30yr mortgage rates rising above 5%. The Fed's Beige Book will be released at 11am pt.
Mortgage backed securities prices are lower (rates higher) this morning as stocks rose around the world and traders increased concern supply is overwhelming demand leading to higher rates. FNMA 4.5% coupon 100.55bps, down 20bps and the low of the session. U.S. service sector shrank further in February as job losses sapped consumer confidence and spending. The service sector represents about 80% of U.S. economic activity. The Mortgage Bankers Association weekly purchase index fell 6% & refinancing index decreased 15% coinciding with 30yr mortgage rates rising above 5%. The Fed's Beige Book will be released at 11am pt.
Obama Administration Launches Housing Plan
Wednesday March 4, 10:01 am ET
By Alan Zibel, AP Real Estate Writer
Gov't provides details, sets standards for housing plan aimed at helping 9 million borrowers
WASHINGTON (AP) -- The Obama administration kicked off a new program Wednesday that's designed to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.
The Treasury Department released detailed guidelines designed to let the lending industry know how to enroll borrowers in the program announced last month.
"It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets," Treasury Secretary Timothy Geithner said in a statement.
The administration, launching what it calls the "Making Home Affordable" initiative, said that borrowers will have to provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to qualify for the $75 billion loan modification program, which runs through 2012.
Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1 2009 or earlier. Up to 4 million borrowers are expected to qualify. Mortgages for single-family properties that are worth more than $729,750 are excluded.
Separately, up to 5 million borrowers who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac should be eligible to refinance through June 2010.
Meanwhile action to put in place another part of Obama's housing plan is expected soon on Capitol Hill.
House Democrats, under pressure from a group of moderates in their ranks and the banking lobby, agreed Tuesday to narrow legislation that gives bankruptcy judges the power to force lenders to lower the interest rate or principal.
of mortgages for troubled homeowners.
Under the terms of the agreement, judges would have to consider whether a homeowner had been offered a reasonable deal by the bank to rework his or her home loan before seeking help in bankruptcy court. Borrowers also would have a responsibility to prove that they tried to modify their mortgages.
The compromise legislation was expected to come to a vote in the House as early as Thursday.
http://www.FinancialStability.gov.
By Alan Zibel, AP Real Estate Writer
Gov't provides details, sets standards for housing plan aimed at helping 9 million borrowers
WASHINGTON (AP) -- The Obama administration kicked off a new program Wednesday that's designed to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.
The Treasury Department released detailed guidelines designed to let the lending industry know how to enroll borrowers in the program announced last month.
"It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets," Treasury Secretary Timothy Geithner said in a statement.
The administration, launching what it calls the "Making Home Affordable" initiative, said that borrowers will have to provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to qualify for the $75 billion loan modification program, which runs through 2012.
Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1 2009 or earlier. Up to 4 million borrowers are expected to qualify. Mortgages for single-family properties that are worth more than $729,750 are excluded.
Separately, up to 5 million borrowers who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac should be eligible to refinance through June 2010.
Meanwhile action to put in place another part of Obama's housing plan is expected soon on Capitol Hill.
House Democrats, under pressure from a group of moderates in their ranks and the banking lobby, agreed Tuesday to narrow legislation that gives bankruptcy judges the power to force lenders to lower the interest rate or principal.
of mortgages for troubled homeowners.
Under the terms of the agreement, judges would have to consider whether a homeowner had been offered a reasonable deal by the bank to rework his or her home loan before seeking help in bankruptcy court. Borrowers also would have a responsibility to prove that they tried to modify their mortgages.
The compromise legislation was expected to come to a vote in the House as early as Thursday.
http://www.FinancialStability.gov.
Tuesday, March 3, 2009
Daily Mortgage Rate Advisory
Rate Lock Advisory - Tuesday Mar. 3rd
Tuesday's bond market has opened down slightly following early stock gains. However, the major indexes have given back those gains to currently stand in negative territory. The Dow was up as much as 85 points during earlier trading while the Nasdaq had gained 21 points. But the Dow is currently down 24 points while the Nasdaq has now lost 2 points. The bond market is currently down 5/32, but I am expecting to see an improvement in this morning's mortgage rates of approximately .125 - .250 of a discount point due to strength yesterday.
There is no relevant economic news scheduled for release today. Fed Chairman Bernanke is speaking to the Senate Budget Committee about the Federal budget and current economic conditions. His words seemed to have fizzled the early stock rally and have pushed traders back into selling mode. If stocks continue to fall further, we may see bonds rally this afternoon and possibly lead to a downward revision in mortgage rates.
Tomorrow's only relevant data is the Fed Beige Book during afternoon trading. This report details economic activity throughout the country by region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading tomorrow. It probably will not cause a major sell off in the stock or bond markets, but could cause enough movement in bond prices to possibly improve or worsen mortgage rates slightly if it reveals any significant surprises.
Thursday and Friday brings us the release of a couple of important economic results, including Friday's Employment Report. Those reports could drive stock prices lower if they show weaker than expected results, and possibly create a bond rally that will improve mortgage rates even more. But, with the recent volatility in the markets, it is a good idea to remain in contact with your mortgage professional if still floating an interest rate.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Tuesday's bond market has opened down slightly following early stock gains. However, the major indexes have given back those gains to currently stand in negative territory. The Dow was up as much as 85 points during earlier trading while the Nasdaq had gained 21 points. But the Dow is currently down 24 points while the Nasdaq has now lost 2 points. The bond market is currently down 5/32, but I am expecting to see an improvement in this morning's mortgage rates of approximately .125 - .250 of a discount point due to strength yesterday.
There is no relevant economic news scheduled for release today. Fed Chairman Bernanke is speaking to the Senate Budget Committee about the Federal budget and current economic conditions. His words seemed to have fizzled the early stock rally and have pushed traders back into selling mode. If stocks continue to fall further, we may see bonds rally this afternoon and possibly lead to a downward revision in mortgage rates.
Tomorrow's only relevant data is the Fed Beige Book during afternoon trading. This report details economic activity throughout the country by region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading tomorrow. It probably will not cause a major sell off in the stock or bond markets, but could cause enough movement in bond prices to possibly improve or worsen mortgage rates slightly if it reveals any significant surprises.
Thursday and Friday brings us the release of a couple of important economic results, including Friday's Employment Report. Those reports could drive stock prices lower if they show weaker than expected results, and possibly create a bond rally that will improve mortgage rates even more. But, with the recent volatility in the markets, it is a good idea to remain in contact with your mortgage professional if still floating an interest rate.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
Mortgage Market Update 2
Yesterday, mortgage backed securities managed to have a small rally and close higher by about .375 in discount. When I say we closed higher by .375 in discount I mean that if a rate was costing .375 in points that rate would cost nothing today. The main driving force for the improvement was a big rally in treasuries which drove the yield from over 3.03 to as low as 2.88 on the 10 yr Treasury note. Unfortunately, overnight we have given back most of the gains but we are still higher than where we opened yesterday. We can give treasuries the credit for the improvement yesterday and we can blame them this morning for the loss. Currently, the 10 year Treasury note is moving back higher and is at a yield of 2.95. It seems of late that mbs are very much attached to treasuries, following them higher and lower but to a lesser degree.
Mortgage Market Commentary
Market Commentary - Tue, Mar 03
Pending home sales fell 7.7% in January as job losses mount and consumer confidence fell. The National Association of Realtors said today that the index is down 6.4% since last year. January's pending sales rose in the West, and fell in the Northeast, South and Midwest.
According to the ICSC-Goldman Sach's Store Sales Index, same store retail sales were weaker during the last week of February, falling by -0.6% week-over-week. Sales also fell by -0.8% on a weekly year-over-year basis. This could be further evidence consumers are "saving more and spending less" during these tough and uncertain economic times.
The Fed is set to launch yet another program to help the ailing economy. The Federal Reserve will lend up to $200B for loans to consumers for education, autos and credit cards. The new program is called the Term Asset-Backed Securities Loan Facility and was supposed to begin in February. The program should generate up to $1 trillion in lending for businesses and households.
Stock markets are rebounding today after the recent carnage that has taken place. Just some facts:
The Dow Jones Industrial Average fell 299 points yesterday and fell to 6763 - a level not seen since Oct. 1996.
The Dow hit an all time high of 14,164 back on Oct. 9, 2007
The S&P 500 stock index came close to closing below 700 for the first time since 1996.
Brought to you, courtesy of The Mortgage Market Guide.
The market commentary material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without error.
Pending home sales fell 7.7% in January as job losses mount and consumer confidence fell. The National Association of Realtors said today that the index is down 6.4% since last year. January's pending sales rose in the West, and fell in the Northeast, South and Midwest.
According to the ICSC-Goldman Sach's Store Sales Index, same store retail sales were weaker during the last week of February, falling by -0.6% week-over-week. Sales also fell by -0.8% on a weekly year-over-year basis. This could be further evidence consumers are "saving more and spending less" during these tough and uncertain economic times.
The Fed is set to launch yet another program to help the ailing economy. The Federal Reserve will lend up to $200B for loans to consumers for education, autos and credit cards. The new program is called the Term Asset-Backed Securities Loan Facility and was supposed to begin in February. The program should generate up to $1 trillion in lending for businesses and households.
Stock markets are rebounding today after the recent carnage that has taken place. Just some facts:
The Dow Jones Industrial Average fell 299 points yesterday and fell to 6763 - a level not seen since Oct. 1996.
The Dow hit an all time high of 14,164 back on Oct. 9, 2007
The S&P 500 stock index came close to closing below 700 for the first time since 1996.
Brought to you, courtesy of The Mortgage Market Guide.
The market commentary material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without error.
Monday, March 2, 2009
Great Article on Mortgage Interest Rates
I saw this article on Bloomberg on the topic of Mortgage interest rates and wanted to share with my Massachusetts borrowers.
Low Mortgage Rates a Mirage as Fees Climb, Eligibility Tightens
By James Sterngold
Feb. 27 (Bloomberg) -- Brian Wickert, a mortgage banker in Butler, Wisconsin, prides himself on screening applicants carefully. That’s why he was stunned when a customer who sailed through four home loans tried to do a refinancing in January, only to be rejected by three national lenders.
The borrower’s credit standing and income were solid, said Wickert, 47, president of Accunet Mortgage. The problem was that, with home sales plummeting along with prices, the appraiser couldn’t find the required three comparable sales in six months within a one-mile radius.
“The business has gotten tougher than I’ve seen it,” Wickert said. “The person who has decided he wants to give himself his own personal economic stimulus package by refinancing at low rates is being stymied by the rules and the fees. Too many people are being excluded.”
Bankers around the country say one reason the housing market hasn’t stabilized is that while mortgage rates have come down, hurdles have gone up. Rising default rates and bank losses have made lenders more risk-averse, leading to higher fees, increased insurance rates and difficulties refinancing loans.
The average rate on a 30-year fixed mortgage dropped to 5.07 percent for the week ending Feb. 26 from 6.63 percent for the one ending July 24, according to data compiled by McLean, Virginia-based Freddie Mac. Meanwhile, the percent of mortgage applications that led to closings fell nationwide to 59 percent in the first half of 2008 from 66.3 percent in 2006, the most recent period for which data is available, the Mortgage Bankers Association reported.
‘Too Tight’
“Underwriting standards have changed from lax to too tight,” said Lawrence Yun, chief economist at the Chicago-based National Association of Realtors. “The pendulum is swinging too far the other way. We can’t stabilize the housing market if buyers can’t get reasonable mortgages.”
Help may be on the way. Under the terms of President Barack Obama’s housing plan announced Feb. 18, as many as 4 million homeowners on the verge of foreclosure will be eligible to have their loans modified to reduce monthly payments. Another 5 million, whose homes are worth less than the principal of their mortgages, also may be able to refinance
The program, which takes effect March 4, only covers borrowers whose mortgages are owned or insured by Washington- based Fannie Mae or Freddie Mac -- about 40 percent of the total, according to Inside Mortgage Finance, a Bethesda, Maryland-based newsletter. They must still prove they have a solid payment history and sufficient income to meet monthly payments, and the loan can’t be more than 105 percent of the appraised value of the home to qualify.
FICO Scores
Those not covered by the Obama plan will have to contend with lenders requiring higher FICO scores than in the past or charging upfront fees to borrowers with scores once considered excellent. San Francisco-based Wells Fargo & Co., the second- largest U.S. home lender, boosted the minimum score for Federal Housing Administration and Veteran Affairs loans it makes through brokers to 620 on Jan. 27 from 600.
“A score of 700 was once near perfect,” said Gwen Muse Evans, vice president of credit policy at Fannie Mae, the government-controlled company that helps set lending standards. “Today, a 700 performs more like a 660 did. We have updated our policy to take into account the drift in credit scores.”
Consumer credit scores, called FICOs after creator Fair Isaac Corp., range from 300 to 850. The average FICO score on mortgages bought by Freddie Mac and Fannie Mae rose to 747.5 in the fourth quarter of last year from 722.3 in 2005, according to Inside Mortgage Finance.
Higher Fees
Accunet’s Wickert said that a 660 FICO score would have qualified most borrowers for loans with no upfront fees in the past. Now, someone trying to borrow $200,000 with a 660 score would have to pay a 2.8 percent fee, or $5,600, he said. Even someone with a 719 score would have to pay $1,750 in cash.
Wickert said that if customers don’t want to pay the fees in cash, he can increase the interest rate, since the wholesale banks he sells his mortgages to would pay more for the higher rate over the life of the loan. Before the crisis, a quarter-of- a-percentage-point increase in the rate was sufficient to cover a 1 percent fee. Now, Wickert said, he needs to double that.
Robert Satnick, a mortgage broker in California’s San Fernando Valley, said he has a customer whose efforts to refinance a loan at a lower rate might cost her about $600 a month more because the value of her condominium has declined.
The owner has good income and a FICO score in the high 700s, he said. The dilemma is that the value of her home has dropped to about $400,000, the amount of her mortgage. As a result, banks will charge her an upfront fee of 1.75 percent on a 6 percent refinancing. She also has to buy private mortgage insurance, adding another $63 a month to her cost.
Out of Reach’
“This is now a great opportunity to buy or refinance,” said Satnick, 44. “But getting the mortgage has gotten so hard it’s putting those properties out of reach of a lot of people.”
Another strain on consumers is a planned increase by Fannie Mae of add-on fees called loan-level price adjustments, which lenders often pass on to borrowers. Someone with a 699 FICO score borrowing 80 percent of the value of a home used to pay 1 percent in price adjustments. As of April 1, Fannie Mae will raise that to 1.5 percent. For a borrower with a 659 score, the adjustment will climb to 3 percent from 2.25 percent.
“These are targeted pricing adjustments aimed at aligning price with risk for the highest risk products in the market today, including interest-only loans, cash-out refinancings, low credit scores, high loan-to-value loans and condos,” said Fannie Mae spokeswoman Amy Bonitatibus.
Staff Reductions
Another issue is that mortgage lenders have eliminated jobs, slowing down the approval process.
“We’re very thinly staffed because we don’t know how long this will last,” said Christopher M. George, president of CMG Mortgage in San Ramon, California, referring to the global financial crisis.
George said he has gone from almost 800 employees in 2006 to 250. Nationwide, employment in the mortgage industry declined to 280,000 in December from 505,000 at the peak in February 2006, according to data compiled by the Mortgage Bankers Association in Washington.
Even with a smaller staff, George said, his underwriters do more checking than in the past. Before the crisis, he said, CMG asked borrowers to fill out an Internal Revenue Service form that allowed the lender to confirm income information, though it rarely sent the form to the IRS. Now, George said, CMG sends the form in before the closing, scrutinizes appraisals and contacts banks to check on the account balances of the borrowers.
“Everything is checked, and that makes it harder for some people,” he said.
Refinancing Program
Fannie Mae, taken over by the government in September after losses on its mortgage holdings, says it is doing what it can to help borrowers and is urging mortgage bankers to do the same.
A new program called DU Refi Plus that takes effect April 4 is intended to make it easier for consumers to refinance their mortgages, even if the value of their homes has declined. Lower FICO scores will be accepted, the requirement for an appraisal or home inspection will be waived in some cases, and borrowers will be able to submit a single pay stub to confirm their salaries rather than more extensive documentation.
Fannie Mae says it still won’t be easy to make low mortgage rates more accessible.
“There needs to be some creativity to get back into the marketplace and get through this fear,” said Fannie Mae’s Evans. “The message we’re trying to promote is we can’t be afraid to lend. We want to get back to the mentality of looking at prudent ways to say ‘Yes.’”
Wickert, whose mortgage-approval rate has declined to 93 percent from 98 percent a year ago, said the issue requires a flexibility that only a few lenders are showing. The customer who was rejected by three banks got her mortgage approved by a fourth, which focused on her high income and credit score, not the appraisal rule, he said, adding weeks to the process.
“A lot of people are frustrated because the rates look good, but someone has raised the bar on them,” Wickert said.
To contact the reporter on this story: James Sterngold in Los Angeles at jsterngold2@bloomberg.net
http://www.bloomberg.com/apps/news?pid=20601213&sid=a8ta_MEhUZ9E&refer=home
Low Mortgage Rates a Mirage as Fees Climb, Eligibility Tightens
By James Sterngold
Feb. 27 (Bloomberg) -- Brian Wickert, a mortgage banker in Butler, Wisconsin, prides himself on screening applicants carefully. That’s why he was stunned when a customer who sailed through four home loans tried to do a refinancing in January, only to be rejected by three national lenders.
The borrower’s credit standing and income were solid, said Wickert, 47, president of Accunet Mortgage. The problem was that, with home sales plummeting along with prices, the appraiser couldn’t find the required three comparable sales in six months within a one-mile radius.
“The business has gotten tougher than I’ve seen it,” Wickert said. “The person who has decided he wants to give himself his own personal economic stimulus package by refinancing at low rates is being stymied by the rules and the fees. Too many people are being excluded.”
Bankers around the country say one reason the housing market hasn’t stabilized is that while mortgage rates have come down, hurdles have gone up. Rising default rates and bank losses have made lenders more risk-averse, leading to higher fees, increased insurance rates and difficulties refinancing loans.
The average rate on a 30-year fixed mortgage dropped to 5.07 percent for the week ending Feb. 26 from 6.63 percent for the one ending July 24, according to data compiled by McLean, Virginia-based Freddie Mac. Meanwhile, the percent of mortgage applications that led to closings fell nationwide to 59 percent in the first half of 2008 from 66.3 percent in 2006, the most recent period for which data is available, the Mortgage Bankers Association reported.
‘Too Tight’
“Underwriting standards have changed from lax to too tight,” said Lawrence Yun, chief economist at the Chicago-based National Association of Realtors. “The pendulum is swinging too far the other way. We can’t stabilize the housing market if buyers can’t get reasonable mortgages.”
Help may be on the way. Under the terms of President Barack Obama’s housing plan announced Feb. 18, as many as 4 million homeowners on the verge of foreclosure will be eligible to have their loans modified to reduce monthly payments. Another 5 million, whose homes are worth less than the principal of their mortgages, also may be able to refinance
The program, which takes effect March 4, only covers borrowers whose mortgages are owned or insured by Washington- based Fannie Mae or Freddie Mac -- about 40 percent of the total, according to Inside Mortgage Finance, a Bethesda, Maryland-based newsletter. They must still prove they have a solid payment history and sufficient income to meet monthly payments, and the loan can’t be more than 105 percent of the appraised value of the home to qualify.
FICO Scores
Those not covered by the Obama plan will have to contend with lenders requiring higher FICO scores than in the past or charging upfront fees to borrowers with scores once considered excellent. San Francisco-based Wells Fargo & Co., the second- largest U.S. home lender, boosted the minimum score for Federal Housing Administration and Veteran Affairs loans it makes through brokers to 620 on Jan. 27 from 600.
“A score of 700 was once near perfect,” said Gwen Muse Evans, vice president of credit policy at Fannie Mae, the government-controlled company that helps set lending standards. “Today, a 700 performs more like a 660 did. We have updated our policy to take into account the drift in credit scores.”
Consumer credit scores, called FICOs after creator Fair Isaac Corp., range from 300 to 850. The average FICO score on mortgages bought by Freddie Mac and Fannie Mae rose to 747.5 in the fourth quarter of last year from 722.3 in 2005, according to Inside Mortgage Finance.
Higher Fees
Accunet’s Wickert said that a 660 FICO score would have qualified most borrowers for loans with no upfront fees in the past. Now, someone trying to borrow $200,000 with a 660 score would have to pay a 2.8 percent fee, or $5,600, he said. Even someone with a 719 score would have to pay $1,750 in cash.
Wickert said that if customers don’t want to pay the fees in cash, he can increase the interest rate, since the wholesale banks he sells his mortgages to would pay more for the higher rate over the life of the loan. Before the crisis, a quarter-of- a-percentage-point increase in the rate was sufficient to cover a 1 percent fee. Now, Wickert said, he needs to double that.
Robert Satnick, a mortgage broker in California’s San Fernando Valley, said he has a customer whose efforts to refinance a loan at a lower rate might cost her about $600 a month more because the value of her condominium has declined.
The owner has good income and a FICO score in the high 700s, he said. The dilemma is that the value of her home has dropped to about $400,000, the amount of her mortgage. As a result, banks will charge her an upfront fee of 1.75 percent on a 6 percent refinancing. She also has to buy private mortgage insurance, adding another $63 a month to her cost.
Out of Reach’
“This is now a great opportunity to buy or refinance,” said Satnick, 44. “But getting the mortgage has gotten so hard it’s putting those properties out of reach of a lot of people.”
Another strain on consumers is a planned increase by Fannie Mae of add-on fees called loan-level price adjustments, which lenders often pass on to borrowers. Someone with a 699 FICO score borrowing 80 percent of the value of a home used to pay 1 percent in price adjustments. As of April 1, Fannie Mae will raise that to 1.5 percent. For a borrower with a 659 score, the adjustment will climb to 3 percent from 2.25 percent.
“These are targeted pricing adjustments aimed at aligning price with risk for the highest risk products in the market today, including interest-only loans, cash-out refinancings, low credit scores, high loan-to-value loans and condos,” said Fannie Mae spokeswoman Amy Bonitatibus.
Staff Reductions
Another issue is that mortgage lenders have eliminated jobs, slowing down the approval process.
“We’re very thinly staffed because we don’t know how long this will last,” said Christopher M. George, president of CMG Mortgage in San Ramon, California, referring to the global financial crisis.
George said he has gone from almost 800 employees in 2006 to 250. Nationwide, employment in the mortgage industry declined to 280,000 in December from 505,000 at the peak in February 2006, according to data compiled by the Mortgage Bankers Association in Washington.
Even with a smaller staff, George said, his underwriters do more checking than in the past. Before the crisis, he said, CMG asked borrowers to fill out an Internal Revenue Service form that allowed the lender to confirm income information, though it rarely sent the form to the IRS. Now, George said, CMG sends the form in before the closing, scrutinizes appraisals and contacts banks to check on the account balances of the borrowers.
“Everything is checked, and that makes it harder for some people,” he said.
Refinancing Program
Fannie Mae, taken over by the government in September after losses on its mortgage holdings, says it is doing what it can to help borrowers and is urging mortgage bankers to do the same.
A new program called DU Refi Plus that takes effect April 4 is intended to make it easier for consumers to refinance their mortgages, even if the value of their homes has declined. Lower FICO scores will be accepted, the requirement for an appraisal or home inspection will be waived in some cases, and borrowers will be able to submit a single pay stub to confirm their salaries rather than more extensive documentation.
Fannie Mae says it still won’t be easy to make low mortgage rates more accessible.
“There needs to be some creativity to get back into the marketplace and get through this fear,” said Fannie Mae’s Evans. “The message we’re trying to promote is we can’t be afraid to lend. We want to get back to the mentality of looking at prudent ways to say ‘Yes.’”
Wickert, whose mortgage-approval rate has declined to 93 percent from 98 percent a year ago, said the issue requires a flexibility that only a few lenders are showing. The customer who was rejected by three banks got her mortgage approved by a fourth, which focused on her high income and credit score, not the appraisal rule, he said, adding weeks to the process.
“A lot of people are frustrated because the rates look good, but someone has raised the bar on them,” Wickert said.
To contact the reporter on this story: James Sterngold in Los Angeles at jsterngold2@bloomberg.net
http://www.bloomberg.com/apps/news?pid=20601213&sid=a8ta_MEhUZ9E&refer=home
Subscribe to:
Posts (Atom)
