Texas Mortgage Corner » market update

Rates Jump Higher Again This Morning

Tommy — Tue, 22 Dec 2009 14:47:09 +0000

Just like yesterday, MBS is taking a beating again this morning. We’re currently down 31 bps, and we’re awaiting the Existing Home Sales report in about 15 minutes.

The GDP (Gross Domestic Product) came in at 2.2%, lower than the expected 2.8% estimate which caused MBS to rise a little, but we are still in negative territory.

I hope you have secured all transactions for the year so that A) You got in while it was really good, and B) To get away from all this drama and enjoy your Christmas.

Be back if anything changes.

Morning Market Update 12/18/09

Tommy — Fri, 18 Dec 2009 14:27:02 +0000

Currently down around 12 bps, there are no economic reports coming out today.

Yesterday was a decent day in terms of mortgage bonds, as we were in the green practically all day.

Bernanke got voted in for a second term as Fed Chairman, and the Fed stated that they intended to keep rates low for an extended period of time, however, the MBS purchase program is going to end on March 31, 2010. The MBS (mortgage backed securities program) is where the Fed buys pools of various mortgage bonds in case you didn’t know.

Let’s clear something up very quickly.

When speaking to several clients, I hear “Oh the Fed is ‘reducing’ rates” or “I heard the Fed is keeping rates at 0%” and expect a 0% mortgage rate on their home loan- THIS DOES NOT MEAN MORTGAGE RATES FOLKS.

The Fed does not control mortgage rates. Mortgage Backed Securities are what determine mortgage rates and it depends on how those securities are traded and at what price that result in the current market mortgage rates.

What the Fed controls is the “Fed Funds Rate” or “Discount Rate” and that is it. These are both very short- term rates that impact credit cards, Home Equity credit lines, auto loans, and most importantly the rate in which banks charge one another to lend money to each other overnight (overnight lending rate). This is basically for one day loans that banks facilitate between themselves to ensure liquidity. When the Fed announces a “cut in rates”, mortgage rates most often will actually move in the opposite direction as the Fed change, as this has to do with the dynamics within the financial markets.

Please read this as it is very important!

MBS Program set to expire soon
Tax Credit Ending soon
FHA Guidelines possibly tightening up
RESPA Changes

Folks, if you are looking to buy a home or refinance, NOW IS THE TIME TO DO IT while rates are still low and the incentives are still here. This is not going to last forever!

Take advantage while you can, and have a fantastic Friday!

Morning Market Update 12/17/09

Tommy — Thu, 17 Dec 2009 16:07:28 +0000

Good morning folks,

Currently we up about 36 basis points (bps) as of this morning, as stocks are in negative territory and the Philadelphia Fed Index (an indicator of manufacturing sector trends) came in higher than expected.

We’re bouncing back from some of the losses from the past week, but I wouldn’t expect MBS to move enough to improve mortgage rates today by a significant amount, if any. Stay tuned for any updates.

Morning Market Update 12/16/09

Tommy — Wed, 16 Dec 2009 15:21:48 +0000

Currently up around 6 bp for the morning and hovering around the 100 Day Moving Average (DMA), the CPI (Consumer Price Index-average price of basket of goods spanning over 200 categories) came in at the estimated 0.4% as well as the Housing Starts (number of new monthly residential construction projects that are underway) which came in at 574k.

The FOMC meeting is scheduled for 2:15pm EST later today. Basically what’s going on here is that the Fed will likely state that they intend to keep the Federal Funds Rate at 0% for an extended period of time into 2010. This will ease fears on inflation as we approach the new year, and hopefully keep mortgage rates stable for a little while longer.

I’d stay where you’re at on any rate locks for the moment as we enter the FOMC meeting later this afternoon.

Cheers, and have a great day!

Morning Market Update

Tommy — Wed, 09 Dec 2009 16:01:34 +0000

Morning all, currently down about 6bp for the morning.

There’s no economic reports coming out today, however, MBS started in negative territory early in the morning and has rebounded back to even levels

We’re attempting to hold above the 25 DMA (Day Moving Average), and are nearing the 1st level of resistance, so I think today should be pretty quiet until this afternoon’s 10 year auction.

If you have some gamble in you, float until today’s treasury auctions, but if you want to play it safe and not kick yourself AFTER, secure any purchase or refinance transactions you are involved in, as the mortgage and bond markets are looking a little uncertain at the moment.

Morning Market Update

Tommy — Mon, 07 Dec 2009 14:02:07 +0000

Good morning all…

MBS is currently up 16bp on the morning and hovering around the 1st level of support.

As for today, there are no economic reports set to come out, so looks like what will be a quiet Monday. (Kind of like what Tim Tebow’s experiencing today…)

2 important days this week are Thursday (Jobless Claims) and Friday (Retail Sales). On Thursday we will also see the auction of the 3 and 10 year notes, as well as the 30 year bonds.

Stay put and if anything changes, I’ll be back.