Mortgage Interest Rate Update 1-25-2011 + Projected Trends
While basic understanding of the “book smarts” within the mortgage industry will help you understand specific terminology, loan programs, and features, there is so much more you will need to know in order to make an informed financial decision.
My approach to providing education strives to further your understanding beyond the “book smarts” of the mortgage industry, and learn the valuable “street smarts” that will help you achieve the best possible results, while avoiding the most common pitfalls that non-informed Borrowers and Real Estate Professionals have experienced.
The Mortgage Street Smarts of where mortgage interest rates are going (and why):
The following information is current as of Tuesday 1-25-2011. 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 Monday with a WORSENING to pricing (as indicated by the chart pointing upward). Note that any movement that exceeds 25 basis points is significant (and will typically warrant a pricing adjustment by most Lenders). Monday’s WORSENING was 6 basis points.
The following chart shows the market activity thus far today (hint: upward activity is good, downward activity is bad):
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)
Market Commentary
Analyst: Neil Trenerry
FNMA 30-YR 4.0%
Previous close 98.810
Opened Up 0.19bp @ 99.000
Key Economic Data:
EUR / USD 1.3595 Down 0.0043
USD / JPY 82.4505 Down 0.0750
GBP / USD 1.5764 Down 0.0224
OIL 86.63 Down 1.24
Gold 1,327.50 Down 17.00
Key Economic News:
9:00: Case-Shiller home price…another significant decline. We estamate a 0.5% drop in the seasonally adjusted month-on-month measure, vs. a -0.8% expectation for the consensus. July through October featured four consecutive drops, with the last two about a percentage point each.
10:00: Coference Board’s consumer confidence index…perking up? We and consensus look for a slight improvement in the December reading of consumer confidence (to 53.5 and 54 respectively), from 52.5 reading in November. Historically the responses on the job market have been fairly well correlated with the unemployment rate, so they will particularly interesting given the notable improvement in the unemployment rate in December.
10:00: FHFA home price index…This conventional mortgage home price index (a narrower focus than the Case-Shiller report) is expected to be flat in December after a surprising 0.7% increase in November.
10:00: Richmond Fed survey…another regional manufacturing survey, this one canvassing both manufacturing abd service-sector firms. The consensus forecast (for the manufacturing portion of the report) looks for strength to continue, with a reading of 22 expected vs 25 for the previous report.
17:00: ABC consumer comfort index…still in the doldrums. After setting a two-year high of -40 two weeks ago, this index slipped back to -43 last week, echoing weakness in other measures of confidence such as the mild setback reported for the Reuters/Michigan survey for early January.
21:00: President Obama delivers his State of the Union Address to Congress. The President is expected to focus mostly on economic issues, and a specific emphasis on tax reform-and in particular, corporate tax reform-and the need to balance near term increases in federal investment with medium term spending cuts. If the speach follows the usual pattern, it is likely to focus on concepts than pecifics, so few detailed proposals should be expected, particularly in the area like corporate tax reform which is at an early stage of debate and in any case doesn’t lend itself to a nationally televised address to Congress. On spending cuts, specifying a target is possible, though here the President may lack incentive to do so, given that the House of Representatives will pass a resolution today intended to bring spending down to 2008, far greater than the President is likely to support. The President does not look likely to make major new proposals on entitlement reform; the recent health reofrm law is still in the process of being implemented, complicating new proposals in that area, while reports indicate that he will not endorse his fiscal commission’s proposal to raise the Social Security retirement age, as some had speculated late last week.
Advice:
With Housing expected to come in weaker, but Consumer confidence expected higher. Today will probably trade in a narrow range.
I would float today.
My position on MBS stays neutral today.
Analyst #2 (Dan Rawitch)
Here is the link to our daily video http://ratewatch.com/ratewatchnow.html
Consumer confidence is the culprit, causing bonds to sell off after a strong opening. This is silly, as far as I am concerned. I am far more concerned by the British GDP contraction, the depression in the housing market and weak corporate earnings, than I am about how 5000 households feel at the moment. Which by the way..they still feel pretty lousy in relative terms. Hopefully the bond market wakes up to what matters soon
Once again…must hold 98.50 or…. We need to break 100 to support my retracement theory.
For more information on topics like this, please feel free to visit www.MortgageStreetSmarts.com (an educational resource for Borrowers, Real Estate Agents, and Financial Professionals). Educational content provided by:
Jason E. Gordon
Residential Mortgage Specialist
CMPS, CDPE, NMLS 259027
Office: 619-200-8031
Email: info@MortgageStreetSmarts.com
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