Last week, I stated that change was inevitable, and that happened as the week played out. More change is on the way, though not just in the mortgage markets, but I will make those announcements later as my 2-year anniversary writing here at Lenderama takes place (November 26th).
Looking back at last week, we saw data continue to be mixed overall, and that mixed bag of news carried over into the Treasury auctions as well. Amazingly, despite the Treasury auctions becoming worse the longer the duration, mortgage backed securities managed to edge out gains for the week. We saw mortgage bonds fail to maintain the bottom initially, then bounced back and exploded through the top, breaking the potential of a downward trend pattern. Data showed housing price improvements, but not in units sold. Consumer Confidence fell yet Consumer Sentiment edged out a slight gain. That was how the week went, but the biggest driving force of MBS pricing was that of the PCE data, which again showed inflation under control.
This week, data is going to continue to play a major role in the markets as we will not see data easing back. In fact, unlike the last two weeks, we start off with data, namely the ISM Manufacturing Index. We also have more major players this week, not to mention the FOMC Meeting and the upcoming Policy Statement. Here is the currently scheduled breakdown…
- Monday: ISM Manufacturing Index (10:00), Pending Home Sales (10:00), Daniel Tarullo Speaks (10:30), 3-month T-Bill Auction (1:00), 6-month T-Bill Auction (1:00)
- Tuesday: FOMC Meeting Begins, 4-week T-Bill Auction (1:00)
- Wednesday: MBA Purchase Applications (7:00), ADP Employment Report (8:15), 30-year T-Bond Announcement (9:00), ISM Services Index (10:00), Crude Inventories (10:30), 3-year T-Note Announcement (11:00), 10-year T-Note Announcement (11:00), FOMC Meeting Announcement (2:15)
- Thursday: Jobless Claims (8:30), Productivity and Costs (8:30), Treasury STRIPS (3:00), Money Supply (4:30)
- Friday: Timothy Geithner Speaks, Nonfarm Payrolls (8:30), Unemployment Rate (8:30), Hourly Earnings (8:30), Average Work Week (8:30), Consumer Credit (3:00), Elizabeth Duke Speaks (3:00)
With the Fed meeting and numerous data plays this week, mortgage bonds will likely have the future spelled out for them by the end of the week. Despite some positive signs in the markets, the data may very well begin to turn against mortgage backed securities and may send mortgage rates higher.
Looking at the charts, what used to be a picture that favored higher mortgage rates has now changed into almost the opposite. However, I have never been one to get overly optimistic and there are negatives that remain, powerful ones at that. For starters, the 25-day MA has not been successfully penetrated since it last failed on October 14, despite repeated attempts. While this latest move to the upside in MBS prices is a short term uptrend and shows of breaking a potential downtrend, this move does not appear to have much more strength behind it. Mortgage bonds are trapped between their 25-day MA and their 50-day MA, a gap that is narrowing each day.
The bottom line for mortgage rates this week is this, by the end of the week, the future will likely be determined as data plays will cause a breakout one way or the other from this narrowing trading range between the 25-day and 50-day moving averages. My gut says they will break out to the bottom, but it will be yet another week of day-by-day action.
Mortgages are good, and jumbo rates are good. It is the requirements and the appraisals that are holding us up. The market is better and there are buyers who need financing in abundance. The thought is that rates will go up. I hope that they don't. I think that everyone is thinking up. The market will not fulfill the majority. That is how it works.
Looks like they did hit bottom, right? They won't be going any lower than this. I was able to lock in with my mortgage bank (Intercontinental Capital Group) at just under 5% so I think I should consider myself lucky.
Good to know that mortgage rates are getting low. Hope it's get stable there at the lowest.
Well, actually they do seem to be getting lower. I was pretty annoyed because I just locked in but my lender said I can get the lowest rate the market hits before I close. Which isn't for six weeks, so I should definitely make out ok. But, I think only direct lenders allow you to lock in a rate and then take a lower one if the market moves that way.
My wife and I were looking into getting a jumbo loan with ICG. Do you know if we can lock in a jumbo rate and then adjust if it goes down?
Yes I think if rates drop before you close you can adjust the rate. I believe, though, that rates are bottomed out or at least pretty close to it. I'm afraid if we wait any longer, we'll be looking back and saying I guess rates did bottom out. P.S. They're extending the conforming limits through 2010 — you may not need a jumbo loan!
We closed! We did have to get a jumbo loan, but we closed at 5.5% which all our friends said was a great deal. Now we're going to need a loan for the furniture and decorating my wife will insist on…
Does anyone know if Intercontinental Capital has an office in Florida? Or if they could do a mortgage for a house in Florida? My husband and I are retiring and moving down south but would love to work with a mortgage bank that has an office in New York, so we don't have to keep flying back and forth.
Yes, I think they do have an office in Florida! But also they can do all the paperwork over phone or fax I think and then you can close at one of their offices or at your new house! Where in Florida are you looking?
We’re looking in West Palm Beach and Boynton Beach. How long did it take for you to close on your place? I’d like to know how quickly things will move once we find something.
It only took us ten days, it was pretty quick.