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From Think Big Work Small: |
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Rate markets started slightly softer today with the stock indexes aiming for a better open at 9:30. No real news overnight, and no key economic releases so the trade today will likely be focusing on the action in the stock market
There is nothing on the day's horizon that will garner any direct focus today. After the continuing volatility this week we expect a generally quiet day with the caveat that it depends on the way stock markets trade. If stock indexes have a strong day the bond and mortgage markets will be pressured somewhat but not much; conversely, if equity markets cave the bond and mortgage markets will improve. The 10 yr note found decent support when it ran up to 4.00% on Monday, since then a little backing down but still the outlook remains bearish. This morning the 10 at 9:30 at 3.91% and coming off a short-covering rally that took its rate back to 3.84%. Mortgage are continuing to track well with the 10 yr and still no evidence that the Fed's exit of MBS purchases has had little impact on mortgage rates. The relationship between the 10 yr note and MBSs has stayed in line with no evidence that mortgage rates are increasing more rapidly than treasuries.
There are still a few out there that believe that the recent increase in interest rates (treasuries and mortgages) is a result of the Fed ending its $1.25T MBS purchases. That is totally wrong and suggests a lack of understanding of what drives interest rates, and why rates are increasing now. The increase in rates has nothing special to do with the MBS markets. Rates are on the rise because each day the view on the economic outlook is improving and that the Fed has ended almost all quantative easing; with stated objective of tightening monetary policy after the near collapse of the banking system in 2008. The only thing that will take rates back lower is a change in sentiment about the future growth of the economy---a double dip. While we do not discount that as a possibility with high unemployment and a housing market that is nowhere near the rebound that many believe, as long as money flows to equities the path for rates is up. How high is the question; our estimate is that the bellwether 10 yr treasury will stay reasonably low and not breach 4.25%-4.30% with mortgage rates on 30 yr fixed holding under 6.00%, more likely 5.75%. It is a moving target, but unless there is a serious increase in the inflation outlook (which we do not expect this year) rates should be reasonably supported. The proof in the pudding on how much of an impact the Fed's exit will have on mortgages will be on any significant rallies in treasuries and how mortgage rates will move on a strong rally.
Besides the better equity markets this morning, treasuries are being pressured by the continuing issues surrounding Greece and its ability to make debt payments. One view has been that the EU, IMF or other entity will come to the rescue, it hasn't happened but there is progress.
At 10:00 the only news today; wholesale inventories for Feb, expected to be +0.3%, was up 0.6% with the inventory to sales ratio unchanged at 1.16 months. No reaction to the report but it is another plus for the economic outlook. |
From Freddie Mac:
Bond Yields Push 30-Year Mortgage Rates to Highest Level in Eight Months April 8, 2010
McLean, VA - Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.21 percent for the week ending April 8, 2010, up from last week when it averaged 5.08 percent. Last year at this time, the 30-year FRM averaged 4.87 percent. This is the highest the 30-year FRM has been since the week ending August 13, 2009 when it averaged 5.29 percent.
The 15-year FRM this week averaged 4.52 percent, up from last week when it averaged 4.39 percent. A year ago at this time, the 15-year FRM averaged 4.54 percent. This is the highest the 15-year FRM has been since the week ending December 31, 2009, when it averaged 4.54 percent.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.25 percent this week, up from last week when it averaged 4.10 percent. A year ago, the 5-year ARM averaged 4.93 percent.
The 1-year Treasury-indexed ARM averaged 4.14 percent this week, up from last week when it averaged 4.05 percent. At this time last year, the 1-year ARM averaged 4.83 percent.
"Once again, mortgage rates followed bond yields higher amid a positive March employment report," said Frank Nothaft, Freddie Mac vice president and chief economist. "The economy added 162,000 jobs, which was the largest monthly gain over the past three years. In addition, revisions raised the January and February figures by a combined 61,000 workers. Excluding government employees, private payrolls rose for the third consecutive month and were the strongest increase since May 2007.
"Following its extension in early November of last year, the homebuyer tax credit is showing some impact on housing market activity, mostly through the use of government-insured mortgages, which tend to be a favorite among first-time homebuyers. Compared to the week ending December 4, 2009, which was the first week after the original expiration date, mortgage applications for home purchases are up 17 percent for the first week in April of this year for government-insured loans, compared to an 11 percent decline in conventional loans, according to the Mortgage Bankers Association. Also, pending existing home sales jumped 8.2 percent in February, well above the market consensus and represented the second largest increase since records began in 2001, the National Association of Realtors® reported. Homebuyers must enter a housing contract by April 30th and close by June 30th in order to receive the tax credit."
From Dick Lepre, San Francisco:
Thursday April 8, 2010 Initial Jobless Claims were 417,000 last week. This is higher than previous and consensus. It should serve as a reminder that restoring jobs is much harder than restoring GDP. Treasury buying resulted and yields are lower in morning trading. Wednesday April 7, 2010 There are no significant fundamentals today and Treasury yields are flat.Tuesday April 6, 2010 Treasury yields seem to have stopped increasing. We have seen mortgage rates increase about 0.375% in the past three weeks. The irony was that this seems to have little or nothing to do with the Fed exiting the mortgage market. With volatility piled upon higher yields this is not going to be a fun Spring for the mortgage industry.
Info below on Bank of America: Dealing with Short Sales - if you missed the Webinar yesterday or would like resources on Short Sales please let me know and I'll get the info to you. I also have a presentation that I can offer to you and/or your team. Let me know what your schedule allows.
Bank of America continues to take steps to improve the short sale process for customers and the real estate professionals who are critical to a successful transaction. The bank has updated training, enhanced technology and established a dedicated team of short sale professionals to help customers and real estate professionals navigate the process. The bank also has deployed Equator, a secure, password-protected Internet portal that provides a platform for real estate professionals and homeowners to track the status of short sales. New tools are in development to assist real estate professionals in navigating Equator.
Weekly Spotlight: NAYA
I just love NAYA - they are so cool in so many aspects. From helping folks get homebuyer education, AARP taxpayer preparation services to other community activities, NAYA is the place to be! Here is info on NAYA - I'm sure you would know someone that could use their services. Tell them Mary sent you.
NAYA Family Center - www.nayapdx.org
The Native American Youth and Family Center (NAYA Family Center ) in Portland, Oregon, works to enrich the lives of Native youth and families through education, community involvement, and culturally specific programming. They have provided educational services, cultural arts programming, and direct support to reduce poverty to the Portland metropolitan area's American Indian and Alaska Native community for over 30 years.
Over the past several years, this non-profit has grown exponentially, expanding community economic development opportunities, such as employment services, financial wellness education, micro-enterprise education, tax preparation services and homeownership education and coaching.
NAYA Family Center Homeownership Program
The desire for homeownership as a way to put down roots, support family, and practice culture is strong for Portland's Native American community. Homeownership builds assets, stability and security for families. In particular, low and moderate-income families can benefit from the stability and asset-building of homeownership. The median net worth of low-income homeowners is 12 times higher than that of renters with similar incomes (Winton-Picoff, National Housing Institute).
Since 2005, NAYA Family Center has developed a culturally specific homeownership program that has served over 60 homebuyers. Services includes: HUD Approved homebuyer education classes, one-on-one coaching, and community based housing stability events. If you would like to know more about the Homeownership Program, visit their webpage.
5th Annual Native American Housing to Homeownership Fair
July 31, 2010, 10am-3pm at NAYA Family Center
The cornerstone event for the Homeownership Program is the annual Native American Housing to Homeownership Fair. This community event is open to the public and provides the resources, information and support for the Urban Native American community to meet home buying professionals such as real estate agents, lenders, banks, home inspectors and various non-profit housing and homeownership providers.
If you would like to get involved as an Fair sponsor or volunteer, please contact Jen Matheson at 503-288-8177x297 or jenm@nayapdx.org.
Portland's Native American Community-- Want to know more?
Portland, Oregon has the 9th largest Native American population in the United States and is home to over 20 Native organizations that employ over 1,000 employees. Even with our concentration of professionals and Native organizations, the Native American community still faces many challenges including access to services and high rates of poverty. While the evidence of need is great, resources have not been equitably distributed to the Native American community. There is a significant homeownership gap of nearly 46% between the Native American population and the white population; in fact, only 25% of the Native American population in Portland are homeowners (American Community Survey - 2008).
To learn more check out, Making the Invisible Visible, Portland's Native American Community
NAYA Family Center - www.nayapdx.org
5135 NE Columbia Blvd
Portland, OR 97218
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