Uncle Sam is back in the credit markets today looking to borrow $24 billion in the form of 10-year notes. Global investors are still pacing the floor as they try to determine whether the $1 trillion rescue package the European Central Bank hammered out over the weekend will be enough to quash the developing debt crisis for Greece and others. This uncertainty together with questions concerning the sustainability of the current stock market rally will likely be enough to induce decent "flight-to-quality" bidding at the government's 10-year note auction this afternoon. If this assessment proves accurate, the impact of this event on the current level of mortgage interest rate will likely be almost imperceptible.
FYI -- as they do every Wednesday, the Mortgage Bankers of America released their mortgage application index for the week ended May 7th earlier this morning. The MBA said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, rose 3.9% last week. The demand for purchase loans dropped 9.5% while refinance loan requests jumped 14.8% higher. The contract rate for 30-year fixed rate mortgages finished the week at 4.96% -- a value 6 basis-points lower than the prior week.
Wednesday, May 12, 2010
Thursday, May 6, 2010
Thursday, May 6, 2010
FOR THOSE THAT QUALIFY: 30 Year fixed Rate 4.75%
20 Year Fixed Rate 4.5%
15 Year Fixed Rate 4.25
MARKET UPDATE : Update 3:35 p.m. - Here in a nutshell what happened to create the stunning whipsaw price action in the stock, bond and mortgage backed securities market this afternoon.
The biggest intraday point drop ever in the Dow Jones Industrial Average may have been caused by an erroneous trade entered by a person at a big Wall Street bank, according to multiple market sources. The so called "fat finger" trade apparently was made by an exchanged traded fund that holds shares of some of the biggest and most largely held shares in the NASDAQ.
In essence instead of entering a trade to sell 100 shares, someone entered a trade to sell 1,000,000 shares. The size of the trade immediately triggered selling by computerized trading platforms and individual investors in both the NASDAQ and the DOW - ultimately resulting in an intraday plunge of more than 950 points for the Dow Jones Industrial Average before calmer, cooler heads prevailed and the DOW closed down a relatively mild 347.8 points.
If it weren't for the enormous amount of panic this event caused in the financial markets - I think this would be a great scenario for one of those Southwest Airlines - "Want to get away?" - commercials.
The dramatic swoon in the stock markets this afternoon produced such a gigantic surge in buying demand that it outstripped by multiples the available supply of safe-haven instruments like Treasury obligations and mortgage-backed securities. When demand reaches panic levels - price soars - and it certainly did in the credit markets this afternoon. As the panic subsides - so do prices.
20 Year Fixed Rate 4.5%
15 Year Fixed Rate 4.25
MARKET UPDATE : Update 3:35 p.m. - Here in a nutshell what happened to create the stunning whipsaw price action in the stock, bond and mortgage backed securities market this afternoon.
The biggest intraday point drop ever in the Dow Jones Industrial Average may have been caused by an erroneous trade entered by a person at a big Wall Street bank, according to multiple market sources. The so called "fat finger" trade apparently was made by an exchanged traded fund that holds shares of some of the biggest and most largely held shares in the NASDAQ.
In essence instead of entering a trade to sell 100 shares, someone entered a trade to sell 1,000,000 shares. The size of the trade immediately triggered selling by computerized trading platforms and individual investors in both the NASDAQ and the DOW - ultimately resulting in an intraday plunge of more than 950 points for the Dow Jones Industrial Average before calmer, cooler heads prevailed and the DOW closed down a relatively mild 347.8 points.
If it weren't for the enormous amount of panic this event caused in the financial markets - I think this would be a great scenario for one of those Southwest Airlines - "Want to get away?" - commercials.
The dramatic swoon in the stock markets this afternoon produced such a gigantic surge in buying demand that it outstripped by multiples the available supply of safe-haven instruments like Treasury obligations and mortgage-backed securities. When demand reaches panic levels - price soars - and it certainly did in the credit markets this afternoon. As the panic subsides - so do prices.
Tuesday, May 4, 2010
Tuesday, May 4, 2010
Doubts about the final approval of a viable Greek fiscal rescue package and a profit taking sell-off in the stock markets have combined to support the prospects for steady to fractionally lower mortgage interest rates today.
Mortgage investors largely shrugged off as "old news" an early morning report from the government indicating March factory orders rose a stronger-than-expected 1.3%. The surge in factory orders in March had been largely telegraphed by the more current April Institute of Supply Management's manufacturing activity report yesterday.
From this point forward mortgage investors will spend the balance of the week positioning themselves for the April nonfarm payroll data series due out on Friday morning at 8:30 a.m. ET. Most analysts expect the economy produced 2000,000 new jobs in March -- while the national jobless rate remained at 9.7%. If the consensus estimate values prove accurate, look for mortgage interest rates to remain little changed. On the other hand, should headline payrolls improve by 210,000 or more and/or should the national jobless rate slip to 9.6% or lower you can virtually "take-it-to-the-bank" mortgage investors will respond by pushing mortgage interest rates notably higher.
Mortgage investors largely shrugged off as "old news" an early morning report from the government indicating March factory orders rose a stronger-than-expected 1.3%. The surge in factory orders in March had been largely telegraphed by the more current April Institute of Supply Management's manufacturing activity report yesterday.
From this point forward mortgage investors will spend the balance of the week positioning themselves for the April nonfarm payroll data series due out on Friday morning at 8:30 a.m. ET. Most analysts expect the economy produced 2000,000 new jobs in March -- while the national jobless rate remained at 9.7%. If the consensus estimate values prove accurate, look for mortgage interest rates to remain little changed. On the other hand, should headline payrolls improve by 210,000 or more and/or should the national jobless rate slip to 9.6% or lower you can virtually "take-it-to-the-bank" mortgage investors will respond by pushing mortgage interest rates notably higher.
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