Friday, May 29, 2009
Todays Market Update
Today's Market Update- Friday May 29, 2009, 2:35 PM ET
Current Trend Direction: Bonds Higher/Interest Rates lower
Risks favor: Floating
Current Price of FNMA 4.00% Bond- 98.28 +109 bp
30 Year Fixed Rates
5.00% APR 5.089%
30-Year Jumbo Fixed Rates
5.375% APR 5.466%
5/1 Jumbo Arm
4.50% APR 4.61%
7/1 Jumbo Arm
4.75% APR 4.70%
What a difference a day makes. After loosing 207 basis points on Wednesday, Mortgage Bonds clawed their way back up 37 basis points on Thursday and are currently up106 basis points so far today, thanks to the 200-Day Moving Average floor of support. Yesterday's price improvement has created a Positive Stochastic Crossover. This usually is a sign of a trend reversal from lower to higher. However, bonds will need to repair the recent damage and will be up against resistance.
The massive supply of treasuries was the reason for the losses in bonds. As you may remember from Economics 101, any time supply exceeds demand, prices will move lower. And remember, a lower price in bonds equal's higher mortgage rates. Hopefully, the market will find a balance as lower bond prices attracts more buyers.
We may continue to see improvement, but it will be tough to see rates get back to levels seen last week, due to fundamental and technical reasons.
What many are not aware of is that the Fed is buying treasuries at the same time they are selling them.
What idiot came up with this idea?
With Mortgage rates now above 5%, the Fed may come out with an announcement that they will buy even more Mortgage Backed Securities and longer-term Treasuries to help keep rates low. The Fed does not want the refinance activity and lagging home purchase market to slow down any time soon.
We are currently recommending floating rates here while waiting for improvements to interest rates.
Today's Market Update
Wednesday May 27, 2009 5:32 PM ET
Current Trend Direction:
Bonds Lower/Interest Rates Higher
Risks favor: Locking
Current Price of FNMA 4.00% Bond- 96.84 -207bp
30 Year Fixed Rates
5.00% APR 5.202%
30-Year Jumbo Fixed Rates
5.75% APR 5.856%
5/1 Jumbo Arm
4.50% APR 4.61%
7/1 Jumbo Arm
4.75% APR 4.70%
Concerning developments in the bond market today. As mentioned yesterday Mortgage Bonds reacted poorly to the news the government is adding to the supply of treasury's. Well today's treasury auction results while not terrible, sparked a massive sell off in the bond and stock markets.
Mortgage Bonds lost a staggering 207 basis points in addition to the 165 basis point losses just over the past few days. Needless to say this is bad news for mortgage rates.
They say "When you snooze, you loose". As you know, I have advocated getting your mortgage application in and locking into an interest rate while they are low. For those of you who listened, congratulations and for those who didn't, better luck next time. When and if there is a next time in the near future.
The Dow Jones lost 173 points to finish the day at 8300. typically the bond and the stock markets move in opposite directions, but stocks reacted negatively to the bond market news as well.
Existing Home Sales were reported at 4.68M, higher than expectations of 4.65M. Inventory of unsold homes rose to a 10.2 month level from April's reading of 9.6, but well below the 11 month reading seen in November. The supply of homes above $750,000 is now at a 40-month supply. Unfortunately this area of the market has not received any attention by helping improve the costs and availability of jumbo loans.
So far Fixed rates have climbed higher by about one half of one percent to about 5.50%- No points. Three, Five and 7 year Arms have maintained there rates, but will rise if the bond market does not improve quickly.
We continue our bias toward locking rates for now.
Tuesday, May 26, 2009
Today's Market Update Tuesday May 26, 2009 4:16 PM ET
Current Trend Direction: Sideways
Risks Favor: Locking
Current Price of FNMA 4.00% Bond - 99.09 -32bp
30 Year Fixed Rate
4.375% APR 4.57%
30 Year jumbo Fixed Rate
5.125% APR 5.23%
5/1 Jumbo Arm
4.50% APR 4.61%
7/1 Jumbo Arm
4.75% APR 4.70%
Mortgage Bonds are down 41 bp on the day.
The sell off was contributed to better than expected consumer sentiment and a strong day of gains for stocks.
This may prove to be a bad week for Mortgage Bonds. As discussed last week there is a massive supply of Treasuries hitting the markets this week and poor auction results will only worsen an already concerning situation.
We are recommending locking rates here ahead of further short term market deterioration.
So far, Adjustable Rate Mortgages , such as the 3, 5 and 7/1 Arm's have not re priced for the worse. However, if the market continues down this path then re pricing for these mortgages is inevitable.
Current Trend Direction: Sideways
Risks Favor: Locking
Current Price of FNMA 4.00% Bond - 99.09 -32bp
30 Year Fixed Rate
4.375% APR 4.57%
30 Year jumbo Fixed Rate
5.125% APR 5.23%
5/1 Jumbo Arm
4.50% APR 4.61%
7/1 Jumbo Arm
4.75% APR 4.70%
Mortgage Bonds are down 41 bp on the day.
The sell off was contributed to better than expected consumer sentiment and a strong day of gains for stocks.
This may prove to be a bad week for Mortgage Bonds. As discussed last week there is a massive supply of Treasuries hitting the markets this week and poor auction results will only worsen an already concerning situation.
We are recommending locking rates here ahead of further short term market deterioration.
So far, Adjustable Rate Mortgages , such as the 3, 5 and 7/1 Arm's have not re priced for the worse. However, if the market continues down this path then re pricing for these mortgages is inevitable.
Friday, May 22, 2009
Today’s Market Update Friday May 22, 2009 10:48 am ET
Current Trend Direction: Sideways
Risks Favor: Very Carefully Floating
Current Price of FNMA 4.00% Bond – 99.62 +9
30 Year Fixed Rate
4.375% APR 4.57%
30 Year jumbo Fixed Rate
5.125% APR 5.23%
5/1 Jumbo Arm
4.50% APR 4.61%
7/1 Jumbo Arm
4.75% APR 4.70%
Mortgage Bonds are near unchanged, but well off the highs seen earlier in the day.
Yesterday Mortgage Bonds got hit with a one, two punch, which pressured prices lower and mortgage rates higher.
First- the Treasury announced they are going to sell $162B worth of Bonds next week. That is a lot of paper that has to be absorbed by the market. That additional supply will hurt Bond prices, making it difficult for them to move higher. This is what happens when the Government has to issue all this debt to pay for the massive stimulus programs.
Then, Pimco’s Bill Gross basically said, the US will eventually lose its AAA credit rating. Even though he did not see that happening any time soon, his comments spooked the markets into a further sell off.
The New York Federal reserve purchased another $25B in Mortgage Backed Securities from May 14 through May 20, bringing the year-to-date total to $482B, out of the $1.25T that its has been allotted. Rates can’t improve much further unless the Fed goes in and buys significant amounts of 4 to 3.5% Bonds.
Hopefully you protected yourself by locking into a rate before yesterdays sell off. If not, let this be a lesson in trying to time the market. So, be sure to lock in if and when these interest rates move down again.
The Bond Market will close early at 2:00 pm today and will be closed Monday in observance of Memorial Day.
Current Trend Direction: Sideways
Risks Favor: Very Carefully Floating
Current Price of FNMA 4.00% Bond – 99.62 +9
30 Year Fixed Rate
4.375% APR 4.57%
30 Year jumbo Fixed Rate
5.125% APR 5.23%
5/1 Jumbo Arm
4.50% APR 4.61%
7/1 Jumbo Arm
4.75% APR 4.70%
Mortgage Bonds are near unchanged, but well off the highs seen earlier in the day.
Yesterday Mortgage Bonds got hit with a one, two punch, which pressured prices lower and mortgage rates higher.
First- the Treasury announced they are going to sell $162B worth of Bonds next week. That is a lot of paper that has to be absorbed by the market. That additional supply will hurt Bond prices, making it difficult for them to move higher. This is what happens when the Government has to issue all this debt to pay for the massive stimulus programs.
Then, Pimco’s Bill Gross basically said, the US will eventually lose its AAA credit rating. Even though he did not see that happening any time soon, his comments spooked the markets into a further sell off.
The New York Federal reserve purchased another $25B in Mortgage Backed Securities from May 14 through May 20, bringing the year-to-date total to $482B, out of the $1.25T that its has been allotted. Rates can’t improve much further unless the Fed goes in and buys significant amounts of 4 to 3.5% Bonds.
Hopefully you protected yourself by locking into a rate before yesterdays sell off. If not, let this be a lesson in trying to time the market. So, be sure to lock in if and when these interest rates move down again.
The Bond Market will close early at 2:00 pm today and will be closed Monday in observance of Memorial Day.
Tuesday, May 19, 2009
Today's Mortgage Market Update
Today’s Market Update- Tuesday May 19th, 2009 11:33 am ET
Current Trend Direction: Sideways
Risks favor: Floating as prices bounce off 100-day Moving Average
Current Price of FNMA 4.00% Bond- 99.81 -6bp
30 Year Fixed Rates
4.25% APR 4.44%
30-Year Jumbo Fixed Rates
5.125% APR 5.23%
5/1 Jumbo Arm
4.50% APR 4.61%
7/1 Jumbo Arm
4.75% APR 4.70%
Bond prices fell yesterday as stocks roared higher. The decline in Bond prices were halted by 100-day Moving Average floor of support and is where it is trading at the moment.
Remember, a strong stock market is bad for bond prices and mortgage rates.
Housing starts fell 12.8% to a seasonally adjusted rate of 458,000 units, well below expectations of 520,000 and the lowest on record since January of 1959.
Building permits also fell to a record low of 494,000 units, down 3.3% from March. Fewer homes being built can help to burn of existing inventory.
The credit markets are seeing improvement and banks are continuing to rebuild confidence in each other, with the LIBOR at .75% today, the lowest on record and a far cry from the 4.81% seen back in October.
JP Morgan, Morgan Stanley and Goldman Sachs have applied to repay up to a combined $45 Billion in TARP money.
We will continue to float rates here as we rest above the 100 day moving average. However, a break below the 100- day MA would not be good for mortgage rates.
Current Trend Direction: Sideways
Risks favor: Floating as prices bounce off 100-day Moving Average
Current Price of FNMA 4.00% Bond- 99.81 -6bp
30 Year Fixed Rates
4.25% APR 4.44%
30-Year Jumbo Fixed Rates
5.125% APR 5.23%
5/1 Jumbo Arm
4.50% APR 4.61%
7/1 Jumbo Arm
4.75% APR 4.70%
Bond prices fell yesterday as stocks roared higher. The decline in Bond prices were halted by 100-day Moving Average floor of support and is where it is trading at the moment.
Remember, a strong stock market is bad for bond prices and mortgage rates.
Housing starts fell 12.8% to a seasonally adjusted rate of 458,000 units, well below expectations of 520,000 and the lowest on record since January of 1959.
Building permits also fell to a record low of 494,000 units, down 3.3% from March. Fewer homes being built can help to burn of existing inventory.
The credit markets are seeing improvement and banks are continuing to rebuild confidence in each other, with the LIBOR at .75% today, the lowest on record and a far cry from the 4.81% seen back in October.
JP Morgan, Morgan Stanley and Goldman Sachs have applied to repay up to a combined $45 Billion in TARP money.
We will continue to float rates here as we rest above the 100 day moving average. However, a break below the 100- day MA would not be good for mortgage rates.
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