[MBS Commentary] – MBS RECAP: Bond Markets Rally As Eurozone Braces For Impact

MBS RECAP: Bond Markets Rally As Eurozone Braces For Impact

Posted to: MBS Commentary
Wednesday, March 27, 2013 4:09 PM

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The domestic hours, like so many past examples, turned out to be relatively contained by the time European markets had their say.  This time, they said good things to MBS and Treasuries, namely that there’s still a bit of concern over the handling of the Cyprus bailout and a lot of concern over what headlines may come tomorrow from Italy.  We can talk all about all sorts of probable considerations for today’s bond markets, but at the end of the day (and at the beginning for that matter), it’s been all about Italy.

Between stocks, Eurodollars, Bund yields (those are German 10yr notes), and Italian credit spreads, US Treasuries exhibited the highest degree of correlation to Italian credit spreads.  In fact, both returned to their post-italian election levels for the first time since March 5th.  This favoring of Italy is readily apparent in the chart.  Teal and Green are Germany and the Euro whereas White and Yellow are 10yr Treasuries and Italian spreads.  Forgive the Treasuries their early month trespasses higher after stronger economic data and focus on how they broke away from the other two in late February and again since mid-March, before ultimately surging lower much more quickly today (note that we have Italian spreads INVERTED so that LOWER=More Risk)

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[Mortgage Rate Watch] – Mortgage Rates Break Cyprus Slide, Move to 2-Week Lows

Mortgage Rates Break Cyprus Slide, Move to 2-Week Lows

Posted to: Mortgage Rate Watch
Wednesday, March 27, 2013 4:13 PM

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Mortgage rates moved lower today at their fastest pace in more than a week, bringing them in line with their lowest levels since last week’s Cyprus-related market movement.  Lender pricing strategies continue to be varied and some lenders didn’t improve nearly as much as the average.  That said, it was enough to clearly tip the scales in favor of 3.625% as a prevailing Best-Execution rate (what is this?) for 30yr Fixed loans.  3.75% and 3.5% may be more viable depending on the scenario and the lender.  

Keep in mind when we reference these adjacent rates that differences in borrowing costs are implied.  For example, 3.5, 3.625, and 3.75% are all likely available from one lender, but different lenders have different costs associated with moving from one rate to the next.  In almost all cases, the cost to move down to 3.5% from 3.625% is higher than the cost to move from 3.75% to 3.625%.

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[MND NewsWire] – Freddie Mac Offers New Streamlined Modification

Freddie Mac Offers New Streamlined Modification

Posted to: MND NewsWire
Wednesday, March 27, 2013 11:47 AM

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Freddie Mac has announced a new Streamlined Modification Program that it says will “open a new gateway to mortgage relief for many of American’s stuggling borrowers.”  Starting July 1, servicers will proactively offer the program to eligible borrowers who are 90 or more days delinquent on mortgages that are at least 12 months old.

The new program can cut monthly mortgage payments as much as other modification programs but does not require borrowers to submit documentation.  They merely accept the…

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[MND NewsWire] – Foreclosure Prevention has aided 2.7 million Fannie and Freddie Borrowers

Foreclosure Prevention has aided 2.7 million Fannie and Freddie Borrowers

Posted to: MND NewsWire
Wednesday, March 27, 2013 11:26 AM

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The Federal Housing Finance Agency (FHFA) says that Freddie Mac and Fannie Mae (the GSEs) assisted 130,000 homeowners with one or more of their foreclosure prevention programs in the fourth quarter of 2012.  These actions brought the total for the entire year to 540,000 and to 2.7 million since the GSEs were placed in federal conservatorship in 2008.

In the fourth quarter home retention actions numbered 97,689, including loan modifications, repayment and forbearance plans and there were 32,642 home forfeiture actions, most of which were short sales…

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[MBS Commentary] – MBS MID-DAY: Much Stronger Overnight, Mostly Holding Gains

MBS MID-DAY: Much Stronger Overnight, Mostly Holding Gains

Posted to: MBS Commentary
Wednesday, March 27, 2013 11:09 AM

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MBS and Treasuries have come off their best levels of the morning just slightly, but remain in significantly better territory vs yesterday’s latest levels.  Most of the gains were seen overnight in global bond markets, bringing Treasuries along for the ride.  It’s hard to ascribe the movement to any single factor, both because there were many factors and the pace of the move was measured and pervasive.  Some of the more prominent stories include collectively lackluster economic data in Europe, a super weak Italian debt auction, a drastic revision to the haircut anticipations for Cyprus Popular Bank (from 40% to 80%), pronounced weakness in equities markets, let by Spain, and underyling defensiveness against Italy’s political prospects.  Fannie 3.0s walked in the door already a quarter of a point higher, but have been holding their ground near 3/8ths higher since 9:30.  Treasury yields bottomed out perfectly in time for the beginning of the Fed’s 10:15-11:00am purchase operation (right at the important 1.83/1.84 inflection zone) and have been sideways near 1.85 ever since.

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[MND NewsWire] – Tight Inventories Constrain Home Purchase Activity

Tight Inventories Constrain Home Purchase Activity

Posted to: MND NewsWire
Wednesday, March 27, 2013 9:54 AM

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Demand is now pushing at the edges of the supply of available homes according to the National Association of Realtors® (NAR).  Limited buyer choices constrained contract signings in February and NAR’s Pending Home Sales Index slipped 0.4 percent from the previous month.

Lawrence Yun, NAR chief economist, said limited inventory is holding back the market in many areas.  “Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50 percent from current levels…”

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[MND NewsWire] – Refinancing Volume Breaks 10-Week Losing Streak

Refinancing Volume Breaks 10-Week Losing Streak

Posted to: MND NewsWire
Wednesday, March 27, 2013 8:28 AM

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Applications for both purchasing and refinancing increased during the week ended March 22 according to information released this morning by the Mortgage Bankers Association (MBA).  MBA’s Market Composite Index, a measure of mortgage application volume, increased 7.7 percent on a seasonally adjusted basis and 8 percent on an unadjusted basis from the previous week.

Applications for refinancing made up 75 percent of the total volume, unchanged from the previous week, and 29 percent of those applications were for HARP loans, down from 30 percent.  The Refinancing Index increased by 8 percent from the week ended March 15 ending 10 straight weeks of declining volume…

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[MBS Commentary] – The Day Ahead: Lots of European Data Plus Pending Home Sales

The Day Ahead: Lots of European Data Plus Pending Home Sales

Posted to: MBS Commentary
Wednesday, March 27, 2013 8:07 AM

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With the benefit of one additional day having transpired in this, the “Cyprus Bailout Week,” we’re quickly seeing that Cyprus-related trading fluctuations were too short-lived to have a whole week named after them, and even then, didn’t rock the boat nearly as much as other historical incidence of so-called Eurodrama.  There’s some small possibility that we haven’t heard the last of Cyprus as a broad-scale market mover, but apart from it’s impact on Greek credit spreads and it’s role as a jumping-off point for EU officials to bring new ideas into the fray, it hasn’t been in the same league as past EU panic spikes.

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Daily Newsletter: Home Price Increases Accelerate; Lax Oversight at FHFA, GSEs; Shadow Inventory in Rapid Decline

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30 Year Fixed

3.64%   +0.01

15 Year Fixed

2.96%   +0.01

10YR Treasury

1.91%   -0.0070

FNMA 30YR 3.5

105.34   -0.09

FNMA 15YR 2.5

105.06   -0.03

Tuesday March 26, 2013
MND NewsWire – 10:39AM
Average home prices increased in all 20 of the cities tracked by the S&P/Case-Shiller Home Price Indices over the 12 months ended in January. Each of Case-Shiller’s city indices …
MND NewsWire – 9:07AM
Another report, the third in a week, has been issued by the Federal Housing Finance Agency’s (FHFA) Office of Inspector General (OIG). The latest report is an assessment of FHFA’s oversight …
MND NewsWire – 10:18AM
The so-called shadow inventory continues to shrink and is now down 28 percent from its high point in January 2010. According to the January 2013 shadow inventory report from CoreLogic …
Pipeline Press – 11:08AM
Remember in the “old days” when we didn’t have government-sponsored refi programs like HARP? I seem to remember the rule of thumb being, “If you could save the borrower .5%, or a couple …
MBS Live Chat – 12:39PM

“REPRICE : 12:39 PM – Sun West Mortgage Better…”

MBS Live Chat – 12:42PM

“REPRICE : 12:42 PM – Franklin American Better…”

MBS Live Chat – 12:46PM

“REPRICE : 12:46 PM – Plaza Better…”

MBS Live Chat – 1:02PM

“RTRS – IMF SAYS PRELIMINARY STRESS TESTS SUGGEST CAPITAL BUFFERS BUILT BY ITALIAN BANKS WOULD OFFSET MOST LOSSES GENERATED BY AN ADVERSE MACROECONOMIC SCENARIO…”

MBS Live Chat – 12:18PM

“RTRS – ITALY CENTRE-RIGHT OFFICIAL SAYS STILL WIDE DIFFERENCES WITH CENTRE-LEFT, IF NOT RESOLVED WILL HAVE TO BACK TO ELECTIONS…”

MBS Live Chat – 12:06PM

“So who can we line up to run their mouth in Europe tomorrow? Can we get a set schedule set up?…”

Today’s Rates
Best Execution
Rate Change
30 Yr FRM 3.64% +0.01
15 Yr FRM 2.96% +0.01
FHA 30 Year Fixed 3.35% +0.01
Jumbo 30 Year Fixed 3.74% +0.01
5/1 Yr ARM 3.00% +0.00
Average Mortgage Rates
Rate Points Change
FHFA *
15 Yr. Fixed 2.78% 0.76 +0.08
30 Yr. Fixed 3.53% 1.11 +0.06
MBA **
30 Yr. Fixed 3.82% 0.38 +0.01
15 Yr. Fixed 3.02% 0.36 +0.01
30 Yr. Jumbo 3.95% 0.36 +0.05
30 Yr. FHA 3.53% 0.31 +0.00
5/1 ARM 3.02% 0.36 +0.01
Freddie Mac **
30 Yr. Fixed 3.54% 0.80 -0.09
15 Yr. Fixed 2.72% 0.70 -0.07
1 Yr. ARM 2.63% 0.40 -0.01
5/1 Yr. ARM 2.61% 0.60 +0.00
* 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 3.0 102.84 -0.05
30YR FNMA 3.5 105.34 -0.09
30YR GNMA 3.0 104.25 -0.06
30YR GNMA 3.5 107.33 -0.09
15YR FNMA 3.0 105.06 -0.03
15YR FNMA 2.5 103.55 -0.03
Treasuries
Yield Change
2 YR 0.2500% +0.0041
5 YR 0.7759% -0.0113
10 YR 1.9111% -0.0070
30 YR 3.1411% -0.0032
Prices as of: 3/26/2013 4:30PM 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.
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Daily Rate Update: Mortgage Rates Increasingly Stuck at Recently Higher Levels

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30 Year Fixed

3.64%   +0.01

15 Year Fixed

2.96%   +0.01

10YR Treasury

1.91%   -0.0070

FNMA 30YR 3.5

105.34   -0.09

FNMA 15YR 2.5

105.06   -0.03

Mortgage Rates Increasingly Stuck at Recently Higher Levels
March 26, 2013

Mortgage rates moved slightly higher today on average, though a few lenders were unchanged or marginally improved.  Some released positively revised rate sheets in the middle of the day as bond markets and MBS (the mortgage-backed-securities that most directly influence rates) improved.  Though today’s move was slightly weaker, it keeps rates in a consistent range just under their 10-month highs.  After having risen to 3.625% in late January, 30yr fixed “best-execution” rates (what is this?) have been persistently stuck between there and 3.75%

In a break from a week and a half of exclusive focus on European headlines, domestic bond markets (which include MBS) actually responded somewhat to today’s economic data.  The biggest standout here was today’ Consumer Confidence numbers, which came in far weaker than expected.  Generally speaking, weaker economic conditions tend to prompt improvements in bond prices which bring interest rates down, but rates have been increasingly picky about where they draw inspiration with the ebbs and flows of systemic European risk as well as Fed policy seen as much bigger considerations.

Europe and the Fed aren’t going anywhere with respect to being the two biggest considerations for interest rates, however.  Instead, today simply provided a reprieve from recent overabundance of headlines out of Europe.  That phenomenon could change very quickly in the next few days as Italy is expected generate more than a few headlines regarding important political meetings taking place for the next three days.  If the news is positive for Italy, it would likely be negative for US interest rates and could act to solidify 3.625% as a longer term floor for best-execution rates.


Loan Originator Perspectives

So is Cyprus a template or not, that is the question. If I had a bunch of cash in an EU bank it would be moved by now. That is going to put additional strain on an already weak economy, which should be good for mortgage rates in the long run. the question is when? If I were closing soon, I would be locked up. NFP (jobs) report next Friday has me nervous as it does every month, and that came in well above expectations last month.” –Brett Boyke, Senior Mortgage Associate,  First Centennial Mortgage.

Rates range bound today, and that’s not a bad thing. With the markets closed on Friday, we don’t expect dramatic movement in the next few days. Next week brings the monthly Non Farms Payroll report, between that and Euro-angst, it ought to be an interesting week!” –Ted Rood, Senior Originator, Wintrust Mortgage.

Europe continues to keep rates low. For mortgage rates to move lower we need the benchmark 10yr to break 1.90. It hasnt been able to do that for quite some time. We speak about ranges and our current range is 1.90 up to 2.06, so we are at the bottom of the current range which is definitely a lock indicator. I would lock if closing within the next 10 days, but would float if closing later to see if more eurodrama can help the 10yr break 1.90.” –Victor Burek, Open Mortgage

I noted Friday that this week could begin with rate locking opportunities for home buyers entering into contract and for refinancers who’ve provided enough documentation to their lenders to be properly pre-approved. And that has proven to be the case so far this week. No amazing rate improvements, but given the rate spike theme of 2013 (rates are up .375% since mid-January), even flat rates are a welcome change.” –Julian Hebron, Branch Manager, RPM Mortgage

The current momentum in headlines has been favorable, however the pricing both in rates and spreads has not moved as favorably as one would like. That being said it appears that we would need further confirmation for lower rates to exist and the fuel for that move has not revealed itself. We have been trading in a range over the last 60 days between the high 1.8’s to the low 2’s on the 10 year (buy low/sell high). Our advice is to lock at these levels.” –Constantine Floropoulos, Quontic Bank


Today’s Best-Execution Rates

  • 30YR FIXED – 3.75%, 3.625% coming back into view
  • FHA/VA – 3.375-3.5% (varies more between lenders than conventional 30yr Fixed)
  • 15 YEAR FIXED –  3.00%, 2.875% coming back into view.
  • 5 YEAR ARMS –  2.625-3.25% depending on the lender


Ongoing Lock/Float Considerations

  • Rates have risen moderately but consistently since hitting their all-time lows in September and October 2012.
  • Regardless of global or domestic economic weakness, the subsiding fear of a disorderly EU breakup will continue to prevent rates from getting back to those lows.
  • This is very likely to be the case unless a similarly panic-inducing event were to come into focus, or if a disorderly break-up regained the spotlight.
  • Sequestration, negative growth, and generally choppy political and economic environments around the world DO NOT constitute that sort of panic.
  • This is a “rising rate environment” until further notice, though pockets of recovery and consolidation can provide smaller-scale opportunities against the larger-scale backdrop.
  • (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 3.64% +0.01
15 Yr FRM 2.96% +0.01
FHA 30 Year Fixed 3.35% +0.01
Jumbo 30 Year Fixed 3.74% +0.01
5/1 Yr ARM 3.00% +0.00
Average Mortgage Rates
Rate Points Change
FHFA *
15 Yr. Fixed 2.78% 0.76 +0.08
30 Yr. Fixed 3.53% 1.11 +0.06
MBA **
30 Yr. Fixed 3.82% 0.38 +0.01
15 Yr. Fixed 3.02% 0.36 +0.01
30 Yr. Jumbo 3.95% 0.36 +0.05
30 Yr. FHA 3.53% 0.31 +0.00
5/1 ARM 3.02% 0.36 +0.01
Freddie Mac **
30 Yr. Fixed 3.54% 0.80 -0.09
15 Yr. Fixed 2.72% 0.70 -0.07
1 Yr. ARM 2.63% 0.40 -0.01
5/1 Yr. ARM 2.61% 0.60 +0.00
* 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 3.0 102.84 -0.05
30YR FNMA 3.5 105.34 -0.09
30YR GNMA 3.0 104.25 -0.06
30YR GNMA 3.5 107.33 -0.09
15YR FNMA 3.0 105.06 -0.03
15YR FNMA 2.5 103.55 -0.03
Treasuries
Yield Change
2 YR 0.2500% +0.0041
5 YR 0.7759% -0.0113
10 YR 1.9111% -0.0070
30 YR 3.1411% -0.0032
Prices as of: 3/26/2013 4:30PM 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:
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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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