Mortgage Interest Rate Update 1-31-2011 + Projected Trends
Introducing an easy-to-follow inside look at mortgage rate activity, featuring charts, rate sheets, market commentary, and even video recordings all in one daily morning blog! Whether you’re a newbee, market analyst (or somewhere in between), keep yourself informed of where mortgage interest rates are going (and why). Subscribe to this free daily update by clicking the button on the right hand side of this page.
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 Monday 1-31-2011. 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 Friday with an IMPROVEMENT to pricing (as indicated by the green arrow pointing upward). Note that any movement that exceeds 25 basis points is significant (and will typically warrant a pricing adjustment by most Lenders). Tuesday’s IMPROVEMENT was 54 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 99.279
Opened Down 0.06bp @ 99.210
Key Economic Data:
EUR / USD 1.3706 Up 0.0095
USD / JPY 82.0158 Down 0.1030
GBP / USD 1.5919 Up 0.0058
OIL 89.64 Up 0.30
Gold 1,327.50 Down 14.20
Key Economic News:
Sturdy gains in spending and income; Core PCE continues to plumb new half-century lows
2010 goes out with sturdy gains in income and especially spending. Core price index much softer than expected, pushing the year-to-year trend to a new half-century low of +0.74%.
Key Numbers:
Consumer spending +0.7% in Dec (mom, +4.1% yoy) vs. median forecast +0.5%.
Personal income +0.4% in Dec (mom, +3.8%) vs. median forecast +0.4%.
PCE core price index +0.3% in Dec (mom, +0.74% yoy) vs. +0.11%, median forecast +0.1%.
Main Points:
1. Spending ended he year on a firm note, rising 0.7% in nominal terms and 0.4% overall and 0.3% in the bread-and-butter labor compensation component.
2. Income gains were somewhat smaller, though still respectable at 0.4% overall and 0.3% in the bread-and-butter labor compensation component.
3. Although energy prices were up sharply on the month (+4.7%, not annualized), prices of food an other items were quite soft-rising 0.1% and 0.3%, respectively. The year-to-year trend in the core index fell to 0.74%, a new recorded low (since 1960).
9:45: Chicago purchasing managers’ index for Jan…moderating but still strong? This index has run stronger than the national ISM manufacturing index in recent months, presumably due to the larger weight that auto-related production has in this region. We expect it to moderate a bit from the strong reading for December but remain firm.
Median forecast (of 42): 64.5, ranging from 60 to 71.3; last 66.8.
10:30: Dallas Fed manufacturing index for Jan….will it show continued growth? After a brief sojourn in deep negative territory during the third quarter, this index recovered during the fourth quarter. The hanful of economists who forecast it expect it to remain there.
Median ofrecast (of 6): +15, ranging from +12 to +19; last 12.8.
Advice:
This morning’s news would suggest that the market will sell-off, but with the turmoil in the middle-east this could change everything.
I would lock today.
My position on MBS changes to neutral today.
Analyst #2 (Dan Rawitch)
Here is the link to our daily video update
http://ratewatch.com/ratewatchnow.html
While the equity markets are focused on earnings, the bond market is turning it’s ear toward Egypt. Personal income and consumption numbers were in line and looked pretty good, but I wonder how sustainable those numbers are without jobs? Chicago PMI also strong…but it been all along and manufacturing is still not creating jobs.
If anything uglier happens in Egypt today, I would look for a huge drop in stocks and a meaningful rally in bonds. Having said that…I pray for everyones safety and a quick resolution!
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
Online Application www.MortgageStreetSmarts.com
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