Devastating day for rates yesterday with a whopping 103 basis point spike! Expert market commentary is listed below to help decipher the "why" behind the changes, along with "what to expect" moving forward.
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 nearly 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!
The Mortgage Street Smarts of where mortgage interest rates are going (and why):
The following information is current as of Thursday 5-23-2013 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 Wednesday with a SIGNIFICANT WORSENING to pricing. Wednesday's SIGNIFICANT WORSENING netted a change of 103 basis points (bps).
(hint: upward activity is good, downward activity is bad)
The following chart shows the activity thus far for today:
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)
2.5 Coupon: Open 97.3438 Change 0.0313
3.0 Coupon: Open 101.8125 Change 0.1094
3.5 Coupon: Open 104.7344 Change 0.0625
5 Year: Open 99.7891 Change 0.0938 Yield 0.8760
10 Year: Open 97.7656 Change 0.3438 Yield 1.9960
30 Year: Open 94.2500 Change 0.8125 Yield 3.1740
Key Economic Data
EUR/USD: Open 1.2910 Change 0.0055
GBP/USD: Open 1.5077 Change 0.0029
USD/JPY: Open 101.360 Change -1.790
Oil: Open 92.55
Key Economic Data:
Initial jobless claims: Actual 340k, Consensus 345k, last 360k, revised 360k.
Jobless claims: 4-week average: Actual 339.5k, Last 339.25k, Revised 340.00k.
Continued jobless claims: Actual 2.912m, Consensus 3.000m, Last 3.009m, Revised 3.024m.
Markit Mfg PMI for May: Actual 51.9, Consensus 51.8, Last 52.1.
Monthly home price for Mar
Month-on-month: Actual 1.3%, Last 0.7%, Revised 0.9%.
Year-on-year: Actual 7.2%, Last 7.1%.
Index: Actual 199.1, Last 196.3, Revised 196.5.
7:00: New Home sales for Apr: Consensus 0.425m, Last 0.417m.
8:00: KC Fed manu: Last 1.
After yesterdays fall, we might see some improvement as traders change positions.
My position on MBS stays neutral.
( Considering going long-buyer )
Market Commentary (Dan Rawitch)
I am guessing Dudley, the NY Fed President spooked the market. He did not say anything we did not know...but it seems that anytime the words "tapering off" are used in a sentence, the market panics. When the fall is over, I'd anticipate an equally aggressive bounce back, provide no other surprises come out
Fed's Dudley: Decision on QE Tapering Will Require Three to Four Months
Wednesday, 22 May 2013 07:20 AM
Federal Reserve Bank of New York President William C. Dudley said policy makers will know in three to four months whether the economy is healthy enough to overcome federal budget cuts and allow the central bank to begin reducing record stimulus.
I dont really understand very well how the tug-of-war between the fiscal drag and the improving economy are going to sort of work their way out, Dudley said in an interview with Michael McKee airing on Bloomberg Television. Three or four months from now I think youre going to have a much better sense of, is the economy healthy enough to overcome the fiscal drag or not.
Dudleys remarks underscore that Fed officials have yet to reach consensus on when or how to dial back their $85 billion monthly bond-purchase program designed to spur growth and lower unemployment. Philadelphia Fed President Charles Plosser has called for reducing stimulus at the Feds next meeting in June, while St. Louiss James Bullard said Tuesday the purchases should continue.
Asked if the Federal Open Market Committee has agreed upon a strategy to taper purchases, Dudley said, we havent gotten to that point. Dudley, 60, is vice chairman of the panel and has a permanent vote, unlike other regional Fed bank presidents, who rotate.
Fed Chairman Ben Bernanke is scheduled to testify on the economic outlook to the Joint Economic Committee of Congress in Washington.
Dudley said improvements in the economy may be obscured by a combination of tax increases and automatic federal spending cuts, known as sequestration, which are curbing growth. He estimated this fiscal drag at 1.75 percent of gross domestic product this year.
The important thing to recognize about the U.S. economy is that things are actually improving underneath the surface, Dudley said in the interview. We dont really see that so much in the activity data yet because of the large amount of fiscal drag.
More Americans than projected filed first-time claims for jobless benefits in the week ended May 11, and industrial production declined in April by the most in eight months, signs that budget cuts may be rippling through the economy.
At the same time, Fed stimulus has helped propel U.S. stocks to successive records and pushed home prices higher. That has helped boost household balance sheets and consumer confidence.
Because the outlook is uncertain, I cannot be sure which way up or down the next change will be, Dudley said of the Feds bond purchases in remarks Tuesday to the Japan Society in New York.
Those comments helped push the Standard & Poors 500 Index 0.2 percent higher to 1,669.16 Tuesday. The yield on the 10- year Treasury note fell to 1.93 percent from 1.97 percent the day before.
In the interview, Dudley said the goal of Fed policy is really about achieving escape velocity. When are we going to have an economy where everything is sort of self-reinforcing, and when the jobs generate income, the income generates demand, demand generates more employment?
I dont think were quite there yet, he added.
Once a decision is made to begin withdrawing stimulus, we certainly want to do it in a way that its not abrupt, its not shocking, he said. We want to make sure that the markets dont overreact to our first move in terms of dialing down the rate of asset purchases, or later on actually starting to raise short-term interest rates.
Dudley said the Fed is revisiting the exit strategy that it drew up in June 2011 as it sought to assure investors that it had the means to avoid igniting inflation once job growth, wages, and demand started moving up. The plan was part of Bernankes push for greater transparency and predictability.
He said the withdrawal principles look a little bit out of date to us.
That strategy calls for the Fed to allow assets to mature without being replaced. The central bank would then modify its guidance on how long it plans to keep the federal funds rate near zero and begin temporary operations to drain excess bank reserves. The Fed would next raise the federal funds rate, and finally, start selling securities.
Dudley said the Fed had the ability to manage monetary policy effectively even with a very, very large balance sheet, a balance sheet even bigger than the balance sheet that we have today and therefore we dont necessarily have to sell off assets.
Joined in 2007
Dudley was a Goldman Sachs Group Inc. economist before joining the New York Fed in 2007. He became president of the regional bank in 2009, succeeding Timothy F. Geithner.
Asked if there was much difference between his views on monetary policy and Bernankes, Dudley said the two were very much in sync.
We do have our debates, but at the end of the day, we usually get to the exact same place, he said. He said he had no idea whether the Fed will have a new chairman when Bernankes second four-year term expires in January.
Dudley said he would absolutely support Vice Chairman Janet Yellen for the top job.
I have tremendous respect for her ability, he said. She is bright. She is tough. She is determined. Shes brave. These are all the qualities that I think a Fed chairman should have.
Trusted Industry Advisor
The above information was compiled and distributed by San Diego Residential Mortgage Specialist, Jason E 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) and Certified Mortgage Coach (CMC), 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.jasongordon.net or www.ApprovingSD.com or more information.
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