Wednesday, April 22, 2009

There is nothing in the way of economic data, Treasury auctions, or Federal Reserve purchases scheduled for today -- which leaves mortgage investors no clear incentive to drive rates one direction or the other.

Against this featureless backdrop the trend trajectory of mortgage interest rates will probably once again be dictated by trading activity in the stock markets. Stock investors have been inundated with first-quarter earnings reports from Corporate America this week. So far, most of the reports have either matched or exceeded expectations - a condition which is causing capital that might have otherwise drifted into the relative safety of the bond and mortgage-backed securities market to remain "in-play" over in the riskier stock markets
Look for mortgage interest rates to remain relatively steady at, or near current levels until either data or events or both become significant enough to serve as a catalyst to spur an increase in trading activity in the mortgage market.

Tomorrow's durable goods orders and existing home sales figures for March won't likely do the "trick" - and Friday's March new home sales number is not likely to draw much more than a passing glance from mortgage investors. So it looks like we are temporarily joined-at-the-hip with the stock markets. Higher stock prices will tend to drag mortgage interest rates higher while lower stocks prices will probably support steady to perhaps fractionally lower mortgage rates.

FYI: The Mortgage Bankers of America reported this morning that their seasonally adjusted mortgage application index rose 3.3% during the week ended April 17th. Refinance applications were up 7.7% while purchase money requests slipped 4.2% lower during the period.