Feb. 6, 2009 -- Mortgage rates moved a
little higher amid the raging "stimulus"
debate. It seems to us that more than
one factor is the cause behind the
mild lift in rates, not the least of
which are glimmers of hope amid the
economic data.
HSH's overall average for the week,
our Fixed-Rate Mortgage Indicator --
inclusive of conforming, jumbo and
'expanded conforming' interest rates -
- rose by eight basis points (.08%),
finishing the week at 5.94%. The
overall 5/1 Hybrid ARM average
moved .06 upward, landing at a
week-ending value of 5.67%. Conforming
30-year FRMs trudged upward
by nine basis points, while
Jumbo 30-year FRMs actually declined
to 6.83% for the period.
One of the factors pressing interest
rates higher is that the influential 10-
year Treasury continued to move
higher, and finished the week stalking
the 3% mark. As we've noted on a
number of occasions, the Treasury
has still considerable but somewhat
diminished influence on FRM rates in
the present environment. For example,
the 10-year Treasury has now
risen by 75 basis points since touching
a weekly low of 2.18% on December
26, but conforming mortgage
rates have only lifted by 31 basis
points over that time.
What this does mean, though, is that
spreads -- the differential between
the 10-yr Note and the average 30-
year FRM -- are starting to narrow,
an encouraging sign of sorts. Normally,
the difference between those
values runs between 150-170 basis
points or so; in late December, amid
still-considerable panic in the market,
that gap stood at a whopping 313
basis points. Since then, that spread
has narrowed to about 250 basis
points again, a signal of calming in
the credit markets. For jumbos, the
gap is now the narrowest in three
months. It does seem that the market
is trying to inch itself back towards
whatever might pass for 'normal'
these days.
After existing home sales bounced up
by 6.5% in December, the National
Association of Realtors reported that
their Pending Home Sales Index also
bumped up by 6.3 points during that
month, which means that January's
existing home sales figures are likely
to also sport a rise when they're
released. Home sales figures still
remain low but do seem to be finding
some kind of bottom around these
levels.
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