At the end of last week, Mortgage Backed Security (MBS) prices rallied to the best closing levels of the year on very light volume. The move appears to have been overdone, and MBS have begun this week by giving back Friday's gains. Construction Spending came in higher than expected and the biggest gain in the past 5 months.
Compared to yesterday's closing, the market has opened with a 0.125 worsening to the Points/Credits associated with any given interest rate option.
This daily mortgage interest rate report is designed to provide Borrowers & Real Estate Profesionals with factual data regarding where rates are at any given time and what trends are propelling current mortgage pricing on any given day. Feel free to browse the library and research historical rate updates dating back over 2 years at www.JasonGordon.info whenever desired. To make things easier, I have also posted a quick report on How To Read The Charts Below.
Also, make sure to learn THE TOP 10 THINGS TO KNOW ABOUT MORTGAGE RATES (to help understand the relationship between rates & fees/credits) along with THE TRUTH BEHIND MORTGAGE QUOTES (to better understand the relationship between up-front closing costs and mortgage interest rates so you don't get duped by clever advertising campaigns). Remember, we all make better decisions in life when we have the actual facts to analyze...share this report with those whom you care about!
The Mortgage Street Smarts of where mortgage interest rates are going (and why):
The following information is current as of Tuesday 12-2-2014 and will help you understand today's 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 Monday with a SIGNIFICANT WORSENING to pricing. Monday's SIGNIFICANT WORSENING netted a change of 27 basis points (bps).
(Note: Upward activity on these charts is GOOD, downward activity is BAD)
The following chart summarizes todays market activity:
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 (Neil Trenerry)
FNMA - Month Dec
Cpn 3.0 Chg -0.0938 Bid 100.73438
Cpn 3.5 Chg -0.0938 Bid 103.95313
Cpn 4.0 Chg -0.0469 Bid 106.65625
Treasury
UST 5 YR Chg -0.1094 Bid 99.71094 Yield 1.5600
UST 10 YR Chg -0.1719 Bid 99.95313 Yield 2.2550
UST 30 YR Chg -0.2031 Bid 100.53125 Yield 2.9730
Currency
Euro Bid 1.2420 Chg -0.0050
Pound Bid 1.5660 Chg -0.0069
Yen Bid 119.10 Chg 0.710
Light Crude
Last 67.90
Key Economic Data:
ICSC Chain Stories
WW: Actual -1.8%, Last 2.2%.
YY: Actual 2.8%, Last 1.7%.
Redbook
MM: Actual -0.6%, Last -0.8%.
YY: Actual 4.8%, Last 4.2%.
6:45: ISM-New York Index for Nov: Last 657.2.
7:00: Construction Spending for Oct: Consensus 0.6%, Last -0.4%.
7:00: IBD Economic Optimism for Dec: Last 46.4.
Advice:
Treasury 30-year bond yields traded below 3 percent for a sixth day amid a weakened inflation outlook before employment data this week forecast to add to evidence income growth is weak. The difference between yields on 10-year notes and similar-
maturity Treasury Inflation Protected Securities, a gauge of expectations for consumer prices, traded at almost the lowest level in three years. Speculation slower consumer price increases will allow the Federal Reserve to delay raising interest rates is also stoking bond-market gains. A sub-3-percent bond is a very strong bond and quite a differential from where people expected it to be, given where we started this year, said Justin Lederer, an interest-rate strategist at Cantor Fitzgerald LP in New York, one of 22 primary dealers that trade with the Fed. Theres no sign in the very short term that inflation will pick up. Thirty-year bond yields were little changed at 2.97 percent at 8:47 a.m. New York time, according to Bloomberg Bond Trader data. The 3 percent securities maturing in November 2044 traded at 100 20/32. The difference between yields on 10-year notes and similar-maturity TIPS traded at 1.81 percentage points today. It dropped to 1.79 percentage points yesterday, the least since October 2011.
My position on MBS:
Short term Changes to Neutral.
Long term Changes to Neutral.
Long = I anticipate pricing to improve which leads to lower Rates.
Neutral = Market should stay close to open plus or minimums 25bps.
Short = I anticipate pricing to weaken which leads to higher Rates.
Short term = 1 - 2 days out
Long term = 30+ days out
MID-DAY UPDATE:
Treasuries fell for a second day as companies including Amazon.com Inc. and American Express Co. sell a record amount of bonds before year-end with borrowing rates not far from six-week lows. Benchmark 10-year yields also rose with the Labor Department forecast to release a report in three days showing the U.S. added more than 200,000 jobs in November for the 10th consecutive month. As companies sell debt, they enter into so-called rate-lock agreements, in which they bet on Treasury
prices falling to guard against higher yields. Once the debt is sold, the wagers are ended. The Bloomberg U.S. Treasury Bond Index of debt due in a decade and more has returned 21 percent this year through yesterday. Theres a large discount in the market because of supply, said Thomas Tucci, managing director and head of Treasury trading in New York at CIBC World Markets Corp. Traders usually go into the number with a softer tone in case the jobs report is better than expected. Benchmark Treasury 10-year note yields rose four basis points, or 0.04 percentage point, to 2.28 percent at 2:20 p.m. New York time, according to Bloomberg Bond Trader data. The 2.25 percent securities maturing in November 2024 traded at 99 23/32. The yield dropped yesterday to 2.15 percent, the lowest level since Oct. 21. The yield will end the year between 2.20 percent and 2.40 percent, Tucci said.
Market Commentary (Dan Rawitch)
I hope you can take a minute to watch my video today. I spent a couple of extra minutes talking about the spread between US bonds and the rest of the world. It helps paint the picture for longer term lower rates.
As for today...the market is doing as I expected it would. We are testing the low end of the channel. I think it will hold, provided nothing that is unexpected and crazy happens. I see us staying in the channel until we see the unemployment numbers at the end of the week
Trusted Industry Advisor
The above information was compiled and distributed by San Diego Residential Mortgage Specialist, Jason Gordon in an effort to provide transparency regarding true mortgage rate activity and market guidance to consumers and professionals interested in this activity. All Market Commentary is provided via The Mortgage Coach and/or their RateWatch technology software.
As a Certified Mortgage Planning Specialist (CMPS) Certified Distressed Property Expert (CDPE) Certified Mortgage Coach (CMC), and Certified Military Housing Specialist (CMHS), Jason E Gordon utilizes his advanced training to examine a prospective Client's complete financial picture, while carefully listening to their overall goals. If it is mutually agreed that a new loan makes sense to pursue, Jason strives to make the entire loan process as seamless as possible. He truly believes that providing open communication and patient educational guidance to his Clients and Business Alliances has been a pivotal component to building his business, while enhancing his reputation in the Mortgage Industry as a Trusted Advisor. Visit www.GordonMortgage.com or www.CrossApproval.com or more information.
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