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The Mortgage Street Smarts of where mortgage interest rates are going (and why):
The following information is current as of Wednesday 5-17-2011 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 Tuesday with a NEUTRAL RESULT to pricing (and will typically warrant a pricing adjustment by most Lenders). Tuesday's NEUTRAL RESULT netted a change of 0 basis points (bps).
The following chart shows the market activity for 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 4.0%
Previous close 100.375
Opened Up 0.03bp @ 100.406
Key Economic Data:
EUR / USD 1.4198 Down 0.0039
USD / JPY 81.3500 Down 0.0653
GBP / USD 1.6135 Down 0.0117
Oil 98.55 Up 1.64
Gold 1,493.10 Up 13.10
Key Economic News:
14:00: FOMC minutes (April 26-27 meeting): Following the chairman. This afternoon the FOMC will release minutes from its April 26-27 meeting. For the first time, the minutes come after a detailed post-meeting press conference from the Fed chairman, and they may therefore be a bit less valuable than usual. With regard to content, we expect their tone to be similar to the press conference. At that event Chairman Bernanke argued that weakness in growth during Q1 was due to mostly transitory factors, though the Fed saw more prolonged weakness in construction activity. On inflation, he said that higher commodity prices "account for pretty much all" of the increase in the Fed's inflation forecast over the short-term, and that the committee would continue to watch inflation expectations closely.
A number of issues related to the Fed's eventual exit from accommodative policy will also likely turn up in the minutes. At the post-meeting press conference, Mr. Bernanke said that "an early step would be to stop reinvesting all or part of the securities which are ... maturing". The minutes will likely also note that halting reinvestment will be one of the earliest steps toward tightening. There is slightly more uncertainty about other aspects of the exit process. In particular, CNBC recently reported that there was no longer a consensus among the FOMC that asset sales would come after rate hikes. We continue to believe that the FOMC leadership would prefer to sell assets only in the distant future-if at all-based primarily on testimony from Chairman Bernanke last year. The minutes will likely include a discussion of this issue, but we doubt they will signal broad support for early asset sales.
Finally, one surprise in the press conference was Chairman Bernanke's definition of "extended period". In response to a question, he said "Extended period suggests that there would be a couple of meetings probably before action", which indicated a shorter time commitment than the six months or longer we previously had thought. If the extended period language came up in a discussion of exit strategies, the minutes could clarify this issue.
19:00: St. Louis Fed President James Bullard speaks to the Money Marketeers group. Q&A scheduled.
Advice:
I believe the market will be on hold until the FOMC minutes are released.
My position on MBS stays neutral.
Analyst #2 (Dan Rawitch):
Here is the link to our daily video
http://ratewatch.com/ratewatchnow.html
Quiet morning thus far with the only scheduled news released being the MBA app number...which was up and we like that!
I dont expect too much outside of the 100.20-100.50 range prior the fed releasing their FOMC notes this afternoon. Meanwhile watch treasuries, we would like to stay below 3.15 on the ten year.
Report is early, so I have less to talk about.
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