Mortgage Market Week In Review Dana Bain Premiere Mortgage December 9th, 2013

Mortgage and Lending with Premiere Mortgage Services Inc. MLO 18693

Newsletter-December 9th, 2013     
Provided by 
Dana Bain & Robin Dunbar Bain
Dana Bain
Premiere Mortgage Services
11 Malvern Hill Road
Sterling, MA 01564
Phone: (978) 422-2311
Fax: (978) 422-2313

Market Comment

Mortgage bond prices finished the week sharply lower, which pushed mortgage interest rates higher.  Rates rose Monday in response to stronger than expected ISM Index data.  The ISM report printed at 57.3 versus the expected 55.5 mark.  The ADP employment report added fuel to the negative fire. ADP rose 215k versus the expected 160k increase. The monthly BLS employment situation report was stronger than expected further pressuring rates. 

Mortgage interest rates finished the week worse by approximately a full discount point or 1/4% in rate.



Date & Time



3-year Treasury Note Auction

Tuesday, Dec. 10,1:15 pm, et

None Important.  Notes will be auctioned.  Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction

Wednesday, Dec. 11,
1:15 pm, et

None Important.  Notes will be auctioned.  Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims

Thursday, Dec. 12,
8:30 am, et

387k Important.  An indication of employment.   Higher claims may result in lower rates.
Retail Sales

Thursday, Dec. 12,
8:30 am, et

Up 1.4% Important.  A measure of consumer demand.  A smaller than expected increase may lead to lower mortgage rates.
30-year Treasury Bond Auction

Thursday, Dec. 12,
1:15 pm, et

None Important.  Bonds will be auctioned.  Strong demand may lead to lower mortgage rates.
Producer Price Index

Friday, Dec. 13,
8:30 am, et

Up 0.3%,
Core up 0.2%

Important.  An indication of inflationary pressures at the producer level.  Weaker figures may lead to lower rates.


The 10 and 30-year Treasury bond yields are often viewed as “benchmarks”, reflecting the overall state of interest rates in the US economy.  Many people concerned about mortgage interest rates track these bonds as a barometer for mortgage interest rates.  However, in reality the Treasury and mortgage markets trade independently.

The supply and demand characteristics of Treasury bonds and mortgage-backed securities (MBS) differ significantly.  Treasury securities represent money needed to fund the operations of the US government.  MBSs, on the other hand, represent borrowing by homeowners.

Information related to Treasury bonds is relatively easy to come by.  Almost every major news medium reports changes.  On the other hand, accurate mortgage interest rate information is difficult and costly to obtain.

In the absence of information directly related to the mortgage interest rate markets, Treasury information can be useful in that the bond market generally trends in the same direction.  However, mortgage interest rates can vary significantly.  In fact, many times the Treasuries will trade wildly while MBS only see minor price changes and vice versa.  Last Tuesday mortgage-backed securities closed down 5/32nds on the day while the 10-year Treasury rose 4/32nds and the 30-year Treasury rose 6/32nds.  This is a prime example where anyone that looked solely at Treasuries thought the mortgage market improved when in reality it worsened.  The data provides a valuable lesson into the differences between Treasury bonds and mortgage-backed securities.  This is an example of why looking solely at treasuries can mislead people.  Keying in on the correct information can mean the difference between making and losing a tremendous amount of money when making float and lock decisions in the short term. 

   MORTGAGE MARKET IN REVIEW Newsletter-December 9th, 2013     

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