Mortgage Market week of 11/7 -11/11/2011
This week looks to be another similar to last. I like the fact that the new found support level of the FNMA 3.5 is at 102. What I don't like about it is while we do have 2 other strong support levels now in place below us so we are not in completely thin are we don't have any real support for a higher push. That does not mean it cannot happen all we need is for the markets to hear anything surrounding Greece in a further negative way or, for that matter, any of the PIIGS could spark a rise in the bond levels, which will bring down rates.
This morning the FNMA 3.5 coupon is basically sitting flat as of Fridays close. Friday closed the week at 102.125 and today we are at a -9 (-6bps at open and another -3 since) BUT then a magical thing happened we see the next hours trade at +6bos an dthe level is back to 102.125? I am not a math major (minor yes but major no) and to me if you start at 102.125 lose 9bps and gain 6bpos back you dont get to the same starting point, do you?
Nothing earth shattering and nothing that will change rates or even pricing from last week. (Mortgage people) remember that a flat open can often bring an improvement to rates as most wise secondary traders will hedge going into the eve and especially on the weekend just in case the market opens weak so their positions aren't exposed.
I don't see a whole lot for today and in this stratosphere of pricing I recommend my clients to lock or look for small windows of gain then to lock. No reason to get greedy here and also, lest our memories dupe us again, if we all recall last year during this time we saw one of the largest bond sell off's in history and watched as the market disintegrated and peeled off over 800bps in just a little over a month time! Rates rose by well over a full 1% and many, many people looking to purchase that were not locked could not take or, even in some cases, still keep approval at the elevated rates. Also there was a rash of people looking to refinance and save money and most all of them had the door of opportunity closed on them.
Be good, dont be greedy, pricing is pheonomenal right now and make it a great week!
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