Mortgage Rates and Mortgage Bonds have had quite a ride this week. Rates have been pushed higher and bond Prices lower since may 13th. Then this past Thursday, Bon prices rallied, only to give back the gains on Friday. Mixed economic signals are causing the volatility in the markets. However, the volatility makes for opportunities to lock into a very low rate, if your timing is good. The best way to time getting that really low rate, is to have your application in process, then wait for a day when rates are low, and lock in.
Mortgage Bonds opened flat this morning, but quickly began to drop as investors saw an opportunity to lock in both short termandlong term gains. The debate over whether the Fed will end the stimulus injections sooner rather than later wasthe fuel behind the move lower along with the S&P and the Dow hitting fresh record highs almost on a daily basis. The 3% coupon fell by 59bp to end at 102.50. The Dow (15,354.40, +121.18) and the S&P (1,666.12, +15.65) both closed at fresh record highs while the Nasdaq (3,498.97, +33.72) still has a ways to go before it can reach its all-time closing record of just over 5,000. Oil was last seen at $95.54/barrel up 78 cents.
Fixed-mortgage rates inched higher for the second consecutive week amid signs of stronger consumer spending, Freddie Mac said in a report Thursday.The 30-year, fixed-rate mortgage came in at 3.51%, up from 3.42% last week, but down from 3.79% last year, Freddie noted in its Primary Mortgage Market Survey. The 15-year, FRM increased to 2.69%, up from 2.61%, while falling from 3.04% last year. Meanwhile, the 5-year Treasury-indexed adjustable-rate mortgage averaged 2.62%, up from 2.58% last week and down from 2.83% a year ago. Additionally, the 1-year Treasury-index ARM rose to 2.55% this week, compared to 2.53% last week and was also down from 2.78% a year earlier.
“Mortgage rates followed U.S. Treasury bond yields higher this week on signs of stronger consumer spending. Advanced retail sales rose 0.1% in April, above the market forecast consensus of a 0.3% decline. Excluding such items as automobiles and gasoline, sales were up 0.5% for the second time in three months,” said Frank Nothaft, vice president and chief economist of Freddie Mac. He added, “Households are also shoring up their balance sheets. Total household debt fell by about $110 billion in the first quarter. In addition, approximately 3 million homeowners were seriously delinquent (90 days or more delinquent or in foreclosure) on their first mortgages, down from a peak of about 5.1 million in the fourth quarter of 2009.”
Bankrate data also shows mortgage rates moving higher. Bankrate’s 30-year, FRM increased to 3.71% from 3.6% a week earlier.
In addition, the 15-year, FRM increased to 2.92%, up from 2.82% last week, while the 5/1 ARM rose to 2.68% from 2.64%.
Economic News
Consumer Sentiment surges to 83.7 in May, well above the 78.5 expected.
U.S. retail sales unexpectedly rose 0.1 percent in April. Economists in a Reuters survey had expected a 0.3 percent decrease, compared with a 0.4 percent drop in March.
U.S. industrial production fell 0.5 percent in April. Economists had been expecting a smaller decline of 0.2 percent.
Sources: CNBC, MMG, Housingwire, Bloomberg