Archive for the ‘Rate Watch’ Category

From Utah Housing:

The following Utah Housing interest rate for 1st Mortgages is effective
immediately through the next rate announcement on Friday, September 25,
2009, for all Mortgage Purchase Agreement Requests received:  

FirstHome and Equity Now  - not to exceed 5.50%

Hint of the week:  Under revised guidelines just released on Home Run
Form 161, our Approved Lender partners may now use investors authorized
to do business in Utah even when they have not signed the documents
necessary to become an Approved Lender as long as adequate documentation
can be furnished.  The new paragraph on Home Run Form 161 reads:

“If the Lender shown on the HUD 1 Settlement Statement will not be
the same as the Lender shown on the Home Run 2 Grant Commitment, UHC
must receive a written underwriting approval from the Lender that will
appear on the HUD 1 Settlement Statement that confirms the relationship
between both Lenders.”

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Utah Housing
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Market: MBS close down 29 bps.  This erases half the gain from yesterday, which was twice the loss of the day before.  So after all this, where are we?  Exactly where we were.  Rates hanging 5% to 5.25% (your rate can and will vary).

Analysis: It’s pretty much official, this is as low as we go.  There is no buying power below 5% on the bond.  Whenever we touch 101 on the 4.5% bond, we retreat.  That means we’re not going lower from here.  At some point, the dam will break, and money will start flowing out of bonds in quantity, and at that point rates will rise, and fairly dramatically.  If you were waiting for the bottom, folks, this is it.

Take your $8000 credit, take your HomeRun2 $4000 (if you’re in Utah), and run with it.  Take what you can get and go.  Now is the time.  You’ve got 70 days to close for the Federal Tax Credit.  Waiting longer than the next week to find a house is unwise.  We’re closing loans contract-to-fund in 19 days, but that’s if everything is perfect, and counting on it is very risky.  So don’t.  Go now.

Cj

Market: We’re flat.  Yesterday we were up 34 bps.  This is a trend, now, and not a blip.  There is consistent pressure for mortgage-backed securities (mbs) to rise to the 100- and 200-day moving averages, which we are sitting on right now.  That means rates holding steady at their current very low levels, between 5% and 5.25%. [Disclaimer: YOUR rate might be higher, and it might be lower.  That depends on a lot of things, not just the current market.  Get a pro to check for you.] [Incidentally, I am a pro.  <grin>]

Analysis: As usual analysis is complicated.  This morning’s data (ISM and pending home sales) were better than expected, which for months now has meant that mbs would retreat and stock would rise.  But for the past two weeks, that has not been so.  It’s not the Fed, this time – the Fed is buying mbs, of course, but buying them in ever-smaller quantities, and buying mostly the 5% and 5.5% coupons, meaning that they are providing no pressure for rates to go below 5%.  That pressure, what of it exists, is coming from the broader market.  And frankly, people, it makes no sense.

There’s no big move to the upside.  There is no immediate prospect of rates dropping back into the 4.5% range.  But still, there is this persistent pressure on mbs pricing that is holding things right where they are, instead of losing ground, as analysts expected (myself among them).  I wrote last week that the only thing I could point to was back-bench sentiment that the economy really wasn’t bottoming out and that there were worse things to come, but as time goes on that argument is less and less persuasive to me.  So I don’t know what it is.  Ideas?  What do you think?

Cj

Market: We’re flat, as in 0bps movement, so far today.  We’ve been trading in a narrow range, with a push to the upside on bonds (down on rates) for a few days now.  I find this exceedingly odd, and will attempt to explain why.  Rates continue 5.25% or thereabouts on the 30-year, lower (and MUCH lower sometimes) on ARMs, which yes, are still out there and making good sense for many.

Analysis: This is a tough market to read.  We are sitting right on the 100-day moving average (and the 200-day moving average).  For weeks, every time we touched that line, we retreated strongly.  Any news, even bad news, was interpreted in the most positive possible light, and bonds sold off.  The stock market is strongly up since March, and though bonds have not fallen by the same amount, the general consensus (here, too) has been that rates were trying to rise and that it was only a matter of time before we saw 6% and higher again.

Well, now I’m not so sure.  This is very odd behavior for the market.  The last couple days there has been some decent economic news, home sales higher, Case-Schiller index higher in 95% of the measured markets, consumer confidence much higher than expected, durable goods orders higher (but with embedded weakness), and ordinarily this would mean a selloff in bonds, especially as we’re right at the top of a trading range.  And yet, and yet.  We even had a huge 5-year treasury auction yesterday, but the bond market actually ROSE following that auction.

So here’s my interpretation at the moment: I think there is a nagging suspicion in the market that there is some really, really negative news coming.  I think there’s a fear that this summer was irrationally exuberant in terms of calling an end to the recession.  I think that means that we’re going to hang out right here on interest rates until at least the $8000 first-time homebuyer credit goes away (loans must be CLOSED by November 30).

That’s my read.  I could be wrong.  I’m holding out at least a 25% chance that there could be a big move down in rates before the end of the year.  I also wouldn’t be surprised to see a large move upward.  But if I were betting, and hey, that’s kind of what I do here every day, I’d bet on holding right here.

Cj

P.S. For you duplex buyer mortgage shoppers, just wanted to say that you’ll need to be in underwriting (for conventional financing) by Monday unless you want to put 20% down.  80% becomes the loan limit on all duplexes as of Tuesday Sept 1.  Just a word to the wise.

Markets: Nothing much happening for the last few days.  Up a bit, down a bit, with the general trend toward up.  Rates still hanging out in the 5.25-5.375% range.

Analysis: It’s the end of summer, and nobody is home.  There is a lot of data coming out tomorrow, and there will be especial attention paid to existing home sales and initial claims.  Mortgage shoppers, watch for that data to be better than expected, and for rates to move higher on very weak volume.  Next week most traders will be back at their desks, but the real long haul of the final third of the year won’t start until after Labor Day.

Only 126 shopping days left until Christmas.  Just FYI.

Cj