Tag: Rate Update

Rate Update July 28, 2009

Posted on by Evan in Rate Update

Mortgage rates are unchanged from yesterday.

As I explained in yesterday’s ‘rate update’ we are closely watching the level of foreign participation in this week’s US Treasury auctions.  Today there will be $42 billion in US T-bills sold to the market.  We wouldn’t surprised to see mortgage rates increase due to the additional supply of bonds on the market.

S & P released their monthly Case-Shiller real estate report.  Many experts consider this report to be the most accurate measure of home prices (click here to understand why).  The report showed that home prices declined on a year-over-year basis at the slowest pace in 12 months.  Many analysts are interrupting this as more evidence that the housing market is at or near bottom.

If you haven’t yet read about the new federal mortgage rules which take effect July 30 and could delay real estate closings you can do so by clicking this link.

Current Outlook: bias towards locking on short-term transactions with additional supply of treasury bills.

Rate Update July 24, 2009

Posted on by Evan in Rate Update

Mortgage rates are unchanged from yesterday (mortgage rates moved modestly higher yesterday. See this morning’s you tube video to learn more about the cause of mortgage rates increasing and what we can laern from it.

The chart below shows mortgage rates ticking higher after hitting a low:

Rate Update June 23, 2009

Posted on by Evan in Rate Update

As we know mortgage rates typically rise when the stock market rallies.  That is the case this morning with the Dow Jones Industrial Average surging past the 9,000 mark for the first time since January.

Stocks are rallying on a flurry of positive earnings data from Ford Motor Co., AT&T, and 3M.

However, stocks are also benefiting from National Association of Realtors report which showed that existing home sales rose for the 3rd straight month in June.  The same report also showed that inventories fell to 9.4 months vs. 9.8 the month before.  This is great news to share with homebuyers who are concerned about the housing market.

There is significant technical support for mortgage-backed bonds at present levels but we still think locking is the best play if you haven’t already.

Current Outlook: locking

Rate Update July 22, 2009

Posted on by Evan in Rate Update

Sometimes words can be louder than actions.  As we expected in yesterday’s ‘rate update’ mortgage rates have improved modestly this morning thanks to Ben Bernanke’s assurances that the Fed has the tools to curb future inflation (even though no action has been taken thus far).

We pointed out earlier in the month the importance of the financial sector in this 2nd-quarter earnings season.  This morning Morgan Stanley & Wells Fargo reported earnings.  Morgan Stanley reported a 3rd straight quarterly loss and Wells Fargo provided weak guidance for the second half of the year.  These two reports are weighing on stocks which should help mortgage rates.

Given that mortgage-backed bonds rallied sharply yesterday we may see traders pull profits off the table which would cause rates to reverse back higher.  For now mortgage rates are extremely attractive but we could see them go a touch lower.  We are shifting to a neutral position.

Current Outlook: neutral

Rate Update July 21, 2009

Posted on by Evan in Rate Update, The Fed

Mortgage rates appear poised to move lower this morning.  Despite positive earnings reports that have helped stocks to move higher, mortgage-backed bonds have rallied this morning thanks to comments made by Fed Chairman Ben Bernanke.

Watch today’s you tube video for details on what he said.

Click this link to view Fed Chairman Bernanke’s Op-ed piece in this morning’s WSJ.

Current Outlook: floating

Rate Update July 20, 2009

Posted on by Evan in Rate Update

Back on July 7th I outlined the importance of watching the stock market in determining the direction of mortgage rates as we entered into the 2nd-quarter earnings season.  Last week positive sentiment from Goldman Sachs, Intel, and Google as well as better than expected housing data helped the Dow Jones Industrial Average rise by almost 600 points.  As we would expect, mortgage rates rose by approximately .25%.

Working against mortgage rates this morning is news out of the WSJ that CIT group has temporarily secured funding to keep them out of bankruptcy.  Later today the index of Leading Economic Indicators will be released.  Should this report be better than expected rates would likely move higher.

Later in the week we get Wells Fargo earnings on Wednesday & existing home sales on Thursday.  The momentum in the market suggests that locking is the best policy right now.

Other notable earnings reports due out this week:
*Dupont
*Catepillar
*UnitedHealth
*Apple
*Microsoft
*McDonald’s
*American Express

Current Outlook: bias towards locking

Rate Update July 17, 2009

Posted on by Evan in Rate Update

Mortgage rates opened up level with yesterday but appear poised to move higher this afternoon in response to a small rally in the stock market. Signs of economic stabilization have helped stocks move into positive territory.

The Commerce Department reported this morning that housing starts in the month of June increased by 3.6% which is much higher than expectations.  With historically low interest rates & lower house prices some analysts believe that this morning’s report signals a “bottom” in the housing market.  Ironically, this news is helping to pressure mortgage rates higher in the near-term.

In another sign of stabilization Google announced today that they were beginning to see demand for advertising firm.  Their encouraging message is also supporting stocks which is hurting mortgage rates.

Not all the news is positive this morning.  Financial bellwethers Citigroup & Bank of America posted mediocre 2nd-quarter earnings.  Furthermore, CIT, which we covered in yesterday’s ‘rate update’ is still scrambling to avoid bankruptcy.

It does look like rates will be higher this afternoon so we recommend locking in at current levels.

Current Outlook: locking

Rate Update July 16, 2009

Posted on by Evan in Rate Update

Mortgage rates did move higher yesterday afternoon but have dropped back to yesterday’s levels this morning.

For the last week we’ve been stressing the importance of the financial sector during this 2nd-quarter earnings season.  On Tuesday Goldman Sachs reported better than expected earnings which pushed rates higher.  This morning JP Morgan reported better than expected earnings but also warned against larger loan losses in the second half of the year.  These comments are hurting financial stocks which is part of the reason mortgage rates recovered from yesterday afternoon’s increase.  Tomorrow Citigroup and Bank of America report earnings.

In other financial news lender CIT has announced that unless it can raise $2 billion in additional capital it will be forced to file for bankruptcy in the next 24 hours.  If this were to happen it would be another blow to the economy as CIT is a major lender to thousands of small businesses across the nation.  It is unclear whether the market fully understands the impact of this announcement.

With the poor outlook given by JP Morgan and the CIT news we are going to shift into a floating position.  I believe Citi & B of A will also warn against upcoming loan losses which will dampen the outlook for stocks; helping to push mortgage rates lower.

Current Outlook: floating

Rate Update July 14, 2009

Posted on by Evan in Rate Update

Mortgage rates are higher this morning. See today’s you tube video for an explanation.

We are shifting our outlook to a neutral stance because mortgage-backed bond prices appear to have technical support at the current levels. Should prices dip below support we will shift our outlook to locking. Tomorrow the Labor Department will be releasing consumer inflation data (CPI) & on Thursday JP Morgan is scheduled to release earnings.

Current Outlook: neutral

Rate Update July 13, 2009

Posted on by Evan in Rate Update

Mortgage rates remain unchanged from Friday.  With the lack of any significant economic data out today we expect mortgage rates to take direction from the stock market.

Currently stocks are trading modestly higher following positive comments made by banking analyst Meredith Whitney on CNBC this morning.  Her comments have helped push financial stocks higher.  If you recall back to last week’s ‘rate update’s we believe that the financial sector will play an important role in determining the direction of mortgage rates for the coming weeks.  Although stocks are higher mortgage rates have not moved higher.

There is a strong possibility for volatility tomorrow as Goldman Sachs is scheduled to release 2nd-quarter earnings and the Labor Department is scheduled to release inflation-related data.  Given that mortgage rates are .75% lower than they were four weeks ago we maintain a bias towards locking.

Current Outlook: bias towards locking