[MBS Commentary] – MBS RECAP: Pre-NFP Bond Markets And Meteorological Cliches

MBS RECAP: Pre-NFP Bond Markets And Meteorological Cliches

Posted to: MBS Commentary
Thursday, January 31, 2013 4:07 PM

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Unlike some pre-NFP Thursdays, which start to exhibit some sort of “lead-off” in either direction, today’s was poster child for “calm before the storm.”  Actually, that would assume that tomorrow’s NFP creates a storm, so it’s not a perfect analogy just yet.  On the other hand, today fits the “calm” requirement so well that almost anything that happens tomorrow would look like a storm by comparison.  The calmness set in with a vengeance after bond markets shook off the last vestiges of directional movement after 10am.  A brief Chicago PMI-related hiccup added a bit to the corrective momentum that was already in play after the much stronger than expected Personal Income report.  Since then, we’ve been very sideways, in a very narrow range and are now heading into the last hour of the day right in line with yesterday’s closing prices.  Given the recent levels of volatility, this is calm indeed.  But don’t let that calmness engender complacency, let alone expectations for “no storm” tomorrow morning.  Such a storm remains very possible, and despite some of the push-back against the notion of further bond market weakness from the analytical community, there’s more room for weakness if the number is big enough tomorrow.  that said, a disappointing number probably makes for a quicker, more decisive swing back to lower yields.

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Daily Rate Update: Mortgage Rates Very Slightly Improved Ahead of Employment Report

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30 Year Fixed

3.59%   -0.01

15 Year Fixed

2.91%   -0.01

10YR Treasury

1.98%   -0.0071

FNMA 30YR 3.5

105.48   +0.08

FNMA 15YR 2.5

105.00   +0.06

Mortgage Rates Very Slightly Improved Ahead of Employment Report
January 31, 2013

Mortgage rates were very slightly lower in most cases, making for marginal improvements in borrowing costs within the confines of recently higher interest rates.  In other words, today’s quoted rate is likely the same as yesterday’s, depending on the scenario, with a token reduction in closing costs (or increase in lender credit).  In many cases, there was no improvement to costs, and a few lenders were slightly higher in cost.  30yr Fixed, Best-Execution remains at 3.625%, though lower rates are still available.

(What is A Best-Execution Mortgage Rate?)  

Treasury and MBS trading was EXTREMELY quiet today as if to suggest a certain calmness before a potential storm (MBS are the mortgage-backed-securities that most directly influence mortgage rates, and they tend to trade in the same direction as Treasuries).  The storm in question is the mighty Employment Situation Report that will be released at 8:30am tomorrow morning.  This is the single most important piece of scheduled economic data each month and tomorrow’s has the potential to be hugely important in light of the abrupt changes we’ve been experiencing in interest rates.  If it shows much better-than-expected job creation, rates could be significantly higher tomorrow.  Conversely, a downbeat report would likely have a substantially positive effect on rates, and also stands the chance to get the recent trend moving back in the other direction.  That sounds enticing, but risks of floating continue to outweigh rewards for now.


Loan Originator Perspectives

Few if any lender reprices today, a refreshing change of pace from recent days. Tomorrow’s NFP report has the potential to move rates, but it would take a remarkably poor number of new jobs created to move MBS much. Seeing a lot of momentum selling now, and when that snowball starts rolling, it’s tough to stop.” –Ted Rood, Senior Originator, Wintrust Mortgage.

Floating through tomorrow’s data is highly risky, so float at your own risk. My personal view is we would have to see a number greater than 225k for it to hurt mortgage rates. Anything under we either hold here or rally. My belief is we see a lower number. ” –Victor Burek, Open Mortgage.

We’re taking the rate improvement between yesterday’s mid-day Fed announcement and today as an opportunity to lock clients at the best levels since this MBS selloff picked up steam a week ago (rates rise in a selloff and drop in a rally). MBS technicals are still too foreboding and upside rate risks outweigh benefits of “holding for better” … especially for clients on short time horizons, like those in contract to buy homes that need to close in the next 20-30 days. ” –Julian Hebron, Branch Manager, RPM Mortgage.


Today’s Best-Execution Rates

  • 30YR FIXED – 3.625%
  • FHA/VA – 3.25% – 3.5% (varies more between lenders than conventional 30yr Fixed)
  • 15 YEAR FIXED –  2.875%- 3.00%
  • 5 YEAR ARMS –  2.625-3.25% depending on the lender


Ongoing Lock/Float Considerations

  • Rates have risen moderately from their all-time lows, making for relatively increased reward for floating at the expense of greater risks of loss.
  • Rates could easily move higher or lower, and unscheduled, unexpected events can ultimately have the most say in the direction.
  • Near term risks in 2013 include the upcoming debt-ceiling debate in Washington as well as the Fed’s policy outlook regarding securities purchases.
  • Prospects For Extending The Debt Ceiling Deadline currently seem to be preventing a move back down in rate.  Passage of such legislation could further support a rising rate environment.
  • (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).
30 Year Fixed Rate Mortgage

15 Year Fixed Rate Mortgage

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Today’s Rates
Best Execution
Rate Change
30 Yr FRM 3.59% -0.01
15 Yr FRM 2.91% -0.01
FHA 30 Year Fixed 3.31% -0.01
Jumbo 30 Year Fixed 3.79% -0.01
5/1 Yr ARM 3.02% +0.00
Average Mortgage Rates
Rate Points Change
FHFA *
15 Yr. Fixed 2.70% 1.16 -0.11
30 Yr. Fixed 3.47% 1.29 -0.07
MBA **
30 Yr. Fixed 3.67% 0.42 +0.05
15 Yr. Fixed 2.95% 0.38 +0.08
30 Yr. Jumbo 3.95% 0.39 +0.10
30 Yr. FHA 3.48% 0.33 +0.08
5/1 ARM 2.60% 0.33 -0.01
Freddie Mac **
30 Yr. Fixed 3.53% 0.70 +0.11
15 Yr. Fixed 2.81% 0.70 +0.10
1 Yr. ARM 2.59% 0.50 +0.02
5/1 Yr. ARM 2.70% 0.60 +0.03
* FHFA averages are updated monthly.
** Mortgage Bankers Association (each Wednesday) and Freddie Mac (each Thursday) averages are updated weekly.
Secondary Markets
MBS
Price Change
30YR FNMA 3.0 103.28 +0.03
30YR FNMA 3.5 105.48 +0.08
30YR GNMA 3.0 104.34 +0.05
30YR GNMA 3.5 107.52 +0.14
15YR FNMA 3.0 105.00 +0.06
15YR FNMA 2.5 103.56 +0.05
Treasuries
Yield Change
2 YR 0.2657% -0.0039
5 YR 0.8814% +0.0048
10 YR 1.9849% -0.0071
30 YR 3.1710% -0.0121
Prices as of: 1/31/2013 4:32PM EST
MBS and Treasury data provided by Thomson Reuters.
Mortgage News Daily and MBS Live! are exclusive re-distributors of Real Time Thomson Reuters Mortgage Information.
Secondary Marketing Managers:
If you are interested in gaining access to the most accurate real-time back-month TBA indications from Thomson Reuters and Tradeweb. Request More Information
About This Report

Mortgage News Daily is a trusted source of mortgage rate market data and analysis, with over 1 million readers each month.  Unlike many rate surveys, our survey is conducted on a daily basis and is designed to bring you the most current and accurate rate data available.  We use a proprietary formula to calculate averages based on best-execution rates from top lender’s rate sheets, also taking into account feedback from hundreds of mortgage market professionals around the country.

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This information is not an advertisement to extend consumer credit as defined by Section 226.2 of Regulation Z. This is not an offer to enter into an agreement regarding interest rates. The rates quoted do not include discount points, origination points, or loan level risk based price adjustments. Rates presented in this report are averages and are subject to change without notice.
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Daily Newsletter: 8.6 Million Mortgage Originations in 2012; Best Places to Buy Foreclosures

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30 Year Fixed

3.59%   -0.01

15 Year Fixed

2.91%   -0.01

10YR Treasury

1.98%   -0.0071

FNMA 30YR 3.5

105.48   +0.08

FNMA 15YR 2.5

105.00   +0.06

Thursday January 31, 2013
MND NewsWire – 11:13AM
The December Mortgage Monitor report released by Lender Processing Services and covering performance data for the full 2012 calendar year , found that while mortgage delinquency rates …
Mortgage Rate Watch – 4:07PM
Mortgage rates were very slightly lower in most cases, making for marginal improvements in borrowing costs within the confines of recently higher interest rates. In other words, today …
MND NewsWire – 9:55AM
Lender Processing Services will pay an aggregated sum of $127 million to resolve suits with 46 states and the District of Columbia arising out of activities of its former subsidiary …
MND NewsWire – 9:50AM
RealtyTrac, the Irvine, California firm that tracks foreclosure activity nationwide, reports that foreclosure activity increased last year in 57 percent of large metropolitan areas …
MND NewsWire – 3:54PM

“just wondering how this works….a family is no longer able to live in a home that was damaged or completely destroyed by the hurricane. Or they are still living in a home that needs repairs. They don’t have the money to repair or are waiting (hoping) to get some help from their insurance or FEMA. Which…”

MBS Live Chat – 3:32PM

“Mortgagee letter regarding FHA mortgage insurance is out. http://portal.hud.gov/hudportal/documents/huddoc?id=13-04ml.pdf…”

MBS Live Chat – 12:51PM

“Bill Gross tweeted today PIMCO is not seeing a large shift from their bond fund to stocks. He states to stock market rally must be coming from cash that was on the sidelines….”

MND NewsWire – 1:01AM

“Correct, Jim, for NEW FHA loans with case numbers issued after new mortgagee letter takes effect (likely 4/1/2013), the MIP will be for the life of the loan. Interesting that the article says “FHA has foregone billions” as MIP has rolled off on current loans. Another way to look at it would be to say…”

Today’s Rates
Best Execution
Rate Change
30 Yr FRM 3.59% -0.01
15 Yr FRM 2.91% -0.01
FHA 30 Year Fixed 3.31% -0.01
Jumbo 30 Year Fixed 3.79% -0.01
5/1 Yr ARM 3.02% +0.00
Average Mortgage Rates
Rate Points Change
FHFA *
15 Yr. Fixed 2.70% 1.16 -0.11
30 Yr. Fixed 3.47% 1.29 -0.07
MBA **
30 Yr. Fixed 3.67% 0.42 +0.05
15 Yr. Fixed 2.95% 0.38 +0.08
30 Yr. Jumbo 3.95% 0.39 +0.10
30 Yr. FHA 3.48% 0.33 +0.08
5/1 ARM 2.60% 0.33 -0.01
Freddie Mac **
30 Yr. Fixed 3.53% 0.70 +0.11
15 Yr. Fixed 2.81% 0.70 +0.10
1 Yr. ARM 2.59% 0.50 +0.02
5/1 Yr. ARM 2.70% 0.60 +0.03
* FHFA averages are updated monthly.
** Mortgage Bankers Association (each Wednesday) and Freddie Mac (each Thursday) averages are updated weekly.
Secondary Markets
MBS
Price Change
30YR FNMA 3.0 103.28 +0.03
30YR FNMA 3.5 105.48 +0.08
30YR GNMA 3.0 104.34 +0.05
30YR GNMA 3.5 107.52 +0.14
15YR FNMA 3.0 105.00 +0.06
15YR FNMA 2.5 103.56 +0.05
Treasuries
Yield Change
2 YR 0.2657% -0.0039
5 YR 0.8814% +0.0048
10 YR 1.9849% -0.0071
30 YR 3.1710% -0.0121
Prices as of: 1/31/2013 4:32PM EST
MBS and Treasury data provided by Thomson Reuters.
Mortgage News Daily and MBS Live! are exclusive re-distributors of Real Time Thomson Reuters Mortgage Information.
Secondary Marketing Managers:
If you are interested in gaining access to the most accurate real-time back-month TBA indications from Thomson Reuters and Tradeweb. Request More Information
View this Report in your Web Browser     |    Forward to a Friend    |    Subscribe
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[Mortgage Rate Watch] – Mortgage Rates Very Slightly Improved Ahead Of Employment Report

Mortgage Rates Very Slightly Improved Ahead Of Employment Report

Posted to: Mortgage Rate Watch
Thursday, January 31, 2013 4:07 PM

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Mortgage rates were very slightly lower in most cases, making for marginal improvements in borrowing costs within the confines of recently higher interest rates.  In other words, today’s quoted rate is likely the same as yesterday’s, depending on the scenario, with a token reduction in closing costs (or increase in lender credit).  In many cases, there was no improvement to costs, and a few lenders were slightly higher in cost.  30yr Fixed, Best-Execution remains at 3.625%, though lower rates are still available.

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[Pipeline Press] – FHA MI Change; Info on Salaried LO’s with 3% Max; Transitional Licensing, CRE Thoughts

FHA MI Change; Info on Salaried LO’s with 3% Max; Transitional Licensing, CRE Thoughts

Posted to: Pipeline Press
Thursday, January 31, 2013 8:37 AM

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Detroit…near bankruptcy? But many areas are doing well. As housing in established urban neighborhoods becomes ever rarer and more expensive, buyers continue to “bet” on areas that may be up and coming, hoping for a happy ending. There is more space for the dollar in resurging neighborhoods according to this article. Housing in these neighborhoods, where the upper middle class moved to get out of the hustle and bustle of midtown, can be architecturally exceptional. The golden rule with real estate is resale, and renovations and neighborhood gentrification go a long way towards that.

And this might be of interest to those who “enjoy” watching politics and housing mesh…or not. N.J. Gov. Chris Christie has conditionally vetoed legislation that was designed to transform foreclosed properties into affordable housing. Christie rejected a bill, S1415 and A2014, that sought to establish the New Jersey Residential Foreclosure Transformation Act through which New Jersey municipalities would have 45 days to decide whether to buy foreclosed vacant houses. More

 

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[MND NewsWire] – Fannie, Freddie Extend Foreclosure Moratorium for Huricane Sandy Victims

Fannie, Freddie Extend Foreclosure Moratorium for Huricane Sandy Victims

Posted to: MND NewsWire
Thursday, January 31, 2013 3:09 PM

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Homeowners whose homes were damaged by the late October super-storm Sandy are getting an extension of the mortgage relief extended immediately after the storm.  The Federal Housing Administration (FHA) and Fannie Mae and Freddie Mac (the GSEs) will extend their respective 90 day moratoria on foreclosures and evictions that were authorized in November for an additional 90 days

Secretary of Housing and Urban Development Shaun Donovan and Edward J. DeMarco, acting director of the Federal Housing Finance Agency (FHFA) announced the extensions on Thursday.  The moratoria apply to homeowners with…

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[MBS Commentary] – MBS MID-DAY: Back To The Middle Of The Day’s Range

MBS MID-DAY: Back To The Middle Of The Day’s Range

Posted to: MBS Commentary
Thursday, January 31, 2013 11:07 AM

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Bond markets coasted into the domestic session in marginally improved territory ahead of this morning’s economic data.  A look at the overnight trading builds the sense that there was indeed some “pressure release” after yesterday’s Fed Announcement arrived without any material changes in policy.  The entirety of the post-FOMC trade in 10yr yields looks like a hang-glider being pushed off a small cliff, but who catches his balance and levels off before crashing.  Stocks and bonds were unified in this leveling off movement, however, which does more to suggest a microscopic unwinding of the “great rotation” trading themes that seem to have been in play recently (money out of bonds, into stocks, general “risk-on” stuff and jives well with the ‘stock-lever’ being connected).  Here’s a chart of the metaphorical hang-glider’s path so far this AM:

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