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The Mortgage Street Smarts of where mortgage interest rates are going (and why):
The following information is current as of Friday 4-29-2011 and will help you understand todays best mortgage rates. 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 Thursday with an IMPROVEMENT to pricing (and will typically warrant a pricing adjustment by most Lenders). Thursday's IMPROVEMENT resulted in a change of 9 basis points (bps).
The following chart shows the market activity thus far today (hint: upward activity is good, downward activity is bad):
The following chart shows market activity over the past 10 days (hint: green is good, red is bad):
The following chart shows market activity over the past 1 month:
Daily Interest Rate Snapshot (sample of rates from one of the country's largest Lenders...individual pricing will vary based on specific Borrower qualifications): NOTE: This Lender has quoted a 1.00% Origination Fee (1 Point) to accompany this pricing. It bears noting that this chart does not necessarily represent todays best mortgage rates.
Market Commentary
Analyst #1 (Neil Trenerry):
FNMA 30-Yr 4.5%
Previous close 102.750
Opened Up 0.03bp @ 102.781
Key Economic Data:
EUR / USD 1.4846 Up 0.0023
USD / JPY 81.4460 Down 0.0898
GBP / USD 1.6640 Up 0.0008
Oil 113.10 Up 0.24
Gold 1,537.40 Up 6.20
Key Economic News:
Deceleration in Spending and Core Inflation
Real consumer spending growth decelerates in March as core PCE price index remains subdued. Employment cost index picks up in the first quarter, due to a sharp increase in benefits.
KEY NUMBERS:
Personal income + 0.5% in Mar (mom), vs. median forecast +0.4%.
Consumer spending + 0.6% in Mar (mom), vs. median forecast +0.5%.
Core PCE deflator + 0.13% in Mar (mom), vs. median forecast +0.1%.
Employment Cost Index +0.6% in Q1 (qoq, not annualized), vs. median forecast +0.5%.
MAIN POINTS:
1. Nominal consumer spending increased by 0.6% mom in March, just slightly above expectations. A large part of the gain, however, reflected price gains as real consumer spending increased by only 0.2% mom. Real spending growth for January and February, however, was revised up by 0.1 and 0.2 percentage points.
2. Nominal personal income increase increased by 0.5% in March, again slightly more than expected. However, real disposable income - income adjusted for taxes and price change - was flat in March and February.
3. The Personal Consumption Expenditures (PCE) price index rose by 0.4% mom or 1.8% yoy, broadly as expected. The core PCE price index rose by 0.1% mom (0.131% unrounded) or 0.9% yoy. The monthly core inflation rate was moderately below our forecast (+0.16% unrounded) and confirms some cooling in inflationary pressures. Growth in the market-based core PCE - which strips out non-market prices estimated by the Commerce Department - also moderated to +0.11% mom from 0.18% in February.
4. The employment cost index rose 0.6% during the first quarter, slightly above expectations. Wages and salaries rose by 0.4%, while benefits rose sharply by 1.1%. Private and government compensation both rose by 0.5%.
9:45: Chicago purchasing managers' index (April). Large decline. We forecast a sharp decline in the Chicago purchasing mangers' index, as we believe the region could be affected by supply-chain disruptions in the motor vehicle sector caused by natural disasters in Japan (for details see Andrew Tilton, "The Effects of Japanese Supply Chain Disruptions on US GDP", US Daily, April 20, 2010).
Median forecast (of 49): 68.2; last 70.6.
10:00: Reuters/University of Michigan consumer sentiment (April final): Possibly small increase. Forecasters are looking for this index to show a small increase after stabilizing in the preliminary April report. Its inflation expectations measures will likely receive extra attention. In the preliminary April release, the measure of 5-10yr inflation expectations fell to 2.9% from 3.2% previously.
Median forecast (of 52): 70.0; last 69.6 (Apr prelim).
12:30: Federal Reserve Chairman Ben Bernanke at community affairs conference.
Advice:
We might see some profit taking to protect profits over the weekend, but otherwise with a week dollar and the news coming in flat. I would expect the MBSs to stay in a close trading range.
Analyst #2 (Dan Rawitch):
Here is the link to our daily video
http://ratewatch.com/ratewatchnow.html
A lot of news was released this morning, most of it pretty much as expected. so we are seeing little reaction thus far. Our technical rally appears to be holding up and at the moment we are trading slightly above 102.80, whiich looks to be a key point on the charts. If we close above the number with any real volume and we could be heading toward 104.00
I am beginning to think that the market is now pricing in the Feds exit to QE2...believe it or not, this is logical to me.
Anyway, be careful right here and have a great weekend!
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