Mortgage Rate Commentary Week of 11/15/10 through 11/19/10

Mortgage and Lending with Stearns NMLS #232164 CA BRE #01380812 BRE 01380812 NMLS 232164

What Happened

Interest Rates popped up last Friday and today. As to why they jumped and what's in store can always be answered with the movie title: "It's Complicated" :) My comments are in BOLD.

MBS Quoteline summarized it well here (italics):

Anticipation of the Fed's quantitative easing program pushed mortgage rates down to the lowest levels in decades, (until last Friday) but they have moved significantly higher since the announcement. (Friday and today.)

The size of the program was close to expectations. With yields so low, though, investors have been questioning what could push them lower in the future. There has been substantial opposition to the quantitative easing program from other countries and from many US politicians and economists, meaning that the Fed will face strong resistance to an expansion of the program.

Unless the economy falters, it may be difficult for mortgage rates to hold near recent lows, and investors have been selling MBS based on this outlook. Today's Retail Sales data was a little stronger than expected. (Mostly fueled by auto sales, remove them and it was a little worse.) Retail Sales ex-autos matched the consensus. The Empire State index came in below expectations. The Dow is up 20 points. No more economic data will be released today.

Many experts believe the movement in the bond market was not justified and that we can expect a correction back to lower mortgage rates.  Last week, prior to Friday borrowers could lock in rates in the low 4's, Monday, those rates moved to mid to high 4's for a conforming refinance.

What's Happening This Week:


PPI- The Producer Price Index.  A Key Inflation Report
Treasury International Capital or TIC Flows - Who is buying our bonds


Mortgage Applications Index- Purchase and refinance activity

CPI- The Consumer Price Index- Important indicator of inflation

Housing Starts - Important index of the housing market activity.


Initial Jobless Claims

Leading Economic Indicators

Industrial Production


No reports


Copyright @ 2010 MBSQuoteline, XINNIX with additional commentary by Mary Anne Daly

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Steve McCoole
Mortgage Alliance Group - San Diego, CA - NMLS#305667 - San Diego, CA


Two words, "inflation fear" at the root of all this.

Nov 15, 2010 09:19 AM #1
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Mary Anne S. Daly

Queen of the Loan & Radio Broadcaster
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