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Mortgage Interest Rate Update 1-27-2011 + Projected Trends

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Mortgage and Lending with CMG Mortgage, San Diego, CA NMLS 259027

Introducing an easy-to-follow inside look at mortgage rate activity, featuring charts, rate sheets, market commentary, and even video recordings all in one daily morning blog! Whether you're a newbee, market analyst (or somewhere in between), keep yourself informed of where mortgage interest rates are going (and why). Subscribe to this free daily update by clicking the button on the right hand side of this page.

While basic understanding of the "book smarts" within the mortgage industry will help you understand specific terminology, loan programs, and features, there is so much more you will need to know in order to make an informed financial decision.

My approach to providing education strives to further your understanding beyond the "book smarts" of the mortgage industry, and learn the valuable "street smarts" that will help you achieve the best possible results, while avoiding the most common pitfalls that non-informed Borrowers and Real Estate Professionals have experienced.

The Mortgage Street Smarts of where mortgage interest rates are going (and why):

The following information is current as of Thursday 1-27-2011.  If you are a Buyer/Borrower who is still on the fence (or if you are a Real Estate Agent attempting to educate your "on the fence" Buyer), please review these trends and secure an historically low interest rate before it is too late.

The market closed Wednesday with a WORSENING to pricing (as indicated by the chart below). Note that any movement that exceeds 25 basis points is significant (and will typically warrant a pricing adjustment by most Lenders). Wednesday's WORSENING was 16 basis points.

Mortgage Street Smarts - Daily Interest Rate Updates & Projections - Provided by Jason E. Gordon, CMPS, Loan Officer, San Diego, CA - www.MortgageStreetSmarts.com

The following chart shows the market activity thus far today (hint: upward activity is good, downward activity is bad):

Mortgage Street Smarts - Daily Interest Rate Updates & Projections - Provided by Jason E. Gordon, CMPS, Loan Officer, San Diego, CA - www.MortgageStreetSmarts.com

The following chart shows market activity over the past 10 days (hint: green is good, red is bad):

Mortgage Street Smarts - Daily Interest Rate Updates & Projections - Provided by Jason E. Gordon, CMPS, Loan Officer, San Diego, CA - www.MortgageStreetSmarts.com

 The following chart shows market activity over the past 1 month: 

 Mortgage Street Smarts - Daily Interest Rate Updates & Projections - Provided by Jason E. Gordon, CMPS, Loan Officer, San Diego, CA - www.MortgageStreetSmarts.com

Daily Interest Rate Snapshot (sample of rates from one of the country's largest Lenders...individual pricing will vary based on specific Borrower qualifications)

 Mortgage Street Smarts - Daily Interest Rate Updates & Projections - Provided by Jason E. Gordon, CMPS, Loan Officer, San Diego, CA - www.MortgageStreetSmarts.com

Market Commentary

Analyst: Neil Trenerry

FNMA 30-YR 4.0%

Previous close 98.663
Opened Down 0.10bp @ 98.563

Key Economic Data:

EUR / USD  1.3747  Up  0.0035
USD / JPY  82.7490  Up  0.5785
GBP / USD  1.5987 Up  0.0052

OIL   87.13  Down  0.20
Gold  1,334.60  Down  0.05

Key Economic News:

Stronger than headline suggests
While headline durable goods orders decline sharply. ex transportation orders show decent gains from an upward revised base. Initial unemployment claims rise sharply, but Labor Department points to weather effects.

Key Numbers:
Durable goods orders -2.5% in Dec vs. consensus +1.5%.
Ex-transportation +0.5% vs. consensus +0.9%.
Initial claims 454k in week of Jan 22 vs. consensus 405k.
Continuing claims 3.991mm in week of Jan 15 vs. consensus 3.873mm.

Main Points:
1.
 Durable goods report looked awful at first glance, but improves considerably on inspection. The headline drop of 2.5% was due in large to the absence of significant civilian aircraft orders in December. These are volatile from month-to-month, so looking at ex-transportation orders provides a cleaner read; here the number was +0.5%. Peeling the onion back further, there was a large upward revision to November ex-transportation orders, to +4.5% from +2.4% previously. And core capital goods orders, a still narrower definition, actually came in slightly stronger than expected, +1.4% on the month atop an upward revision to November. So when all is said and done, the report is actually fairly encouraging and consistent with dtrength in other metrics of manufacturing activity.

2. Initial claims increase sharply by 51k to 454k in the week ended Jan 22. The Labor Department, however, identifies bad weather as the likely case of the deterioration. Continuing claims likewise rise more than anticipated by 94k to 3.991mm. Ectened benefits decline by 100k in the week ended Jan 8.

10:00: Pending home sales index for Dec...will it hold the gain or mean revert? The median forecast is for another small increase, but we wonder about this giben the sharp drop in mortgage purchase applications in recent weeks.
Median forecast (of 41): +1.0%, ranging from -3.2% to +5.1%; last +3.5%.

16:30: Federal Reserve balance sheet...
The balance sheet contracted last week by about $43bn as repayments of loans to AIG overrode ongoing purchases of Treasury securities. We continue to expect the balance sheet to reach about $2.9trn by midyear, up from $2.428trn in week ending Wednesday January 19.

Advice:

With durable goods and unemployment number, on the surface both disappointing, and with pending home sales expected to be flat to small gain. We might see a pikup in the MBS market.

Float with caution.

My position on MBS stays neutral today.

Analyst #2 (Dan Rawitch)

Here is the link to our daily update 
http://ratewatch.com/ratewatchnow.html

We certainly have the fuel for my rally...there is just a bit too much condensation in the fuel which is currently causing the engine to falter.  I suspect the bad fuel burns off as the trading day goes on and we take another run at 99.  We will need some help from the 7 year auction later today though.

Anyway, Japan downgraded, Durable orders down and Jobless claims up should give the market plenty to think about going into the auction later today.

GDP tomorrow will be interesting and the market may stay conservative ahead of that number.  I still expect a fair amount of range bound volitility today.

 

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