Austin, Texas Mortgages

Daily Mortgage Market Information

2010-09-17T12:22:00.000-07:00

Mortgage investors are putting the finishing touches on their risk management positions this morning before largely slipping out early this afternoon for what promises to be a very nice last weekend of summer for much of the country.

The Labor Department released its August Consumer Price Index data earlier this morning – and mortgage investors yawned. The headline measure of inflation at the consumer level showed a gain of 0.3% last month – slightly stronger than expected – but that gain was offset by the unexpectedly flat reading for the more important core component of the index (a value which excludes volatile food and energy costs). The year-over-year rate of both headline and core consumer price inflation remains stable at 1.0% -- a condition that sharply reduces the likelihood of a pronounced and sustained upward move for mortgage interest rates – at least in the near-term.

Looking ahead to next week the Federal Open Market Committee will huddle for a one-day monetary policy strategy discussion on Tuesday, September 17^th. Central bankers will weigh their diverging views on the how the economy is likely to perform next year and will debate their respective theories on how best to re-fire the nation’s economic engines. When they release their post-meeting statement at 2:15 p.m. ET it will likely reveal the Fed chose to remain on the sidelines and watch a bit longer before taking any form of action. Such an outcome is already priced into the mortgage market -- so if this assessment proves accurate -- the Fed meeting will be a nonevent with respect to the current trend trajectory of mortgage interest rates.

News from the housing sector will dominate the balance of next week’s economic calendar – ranging from Tuesday morning’s August Housings Start and Building Permit numbers through the existing and new home sales data on Thursday and Friday respectively. The collective story is expected be one of almost imperceptible improvement – a condition not likely to cause mortgage investors to aggressively push mortgage interest rates notably higher.

For the remainder of the day look for mortgage interest rates to take their directional cue from trading action in the stocks markets. Higher stock prices will tend to draw mortgage interest rates fractionally higher. With mortgage note rates currently floating either at, or within a breath of their all-time historical lows, falling stock prices will not likely serve to push these note rates appreciably lower – though mortgage investor pricing may improve a little. From a technical perspective I continue to see reasons to believe the Dow will probably put in a multi-day high between 10550 and 10650 -- perhaps before the close of trading today.

Daily Mortgage Market Information

2010-09-14T10:08:00.001-07:00

The credit market is undergoing a technically driven adjustment this morning as last week’s $67 billion of Treasury obligations and the biggest supply of long-dated corporate debt issues since last March are redistributed by primary dealers and big-money center banks. Risk management strategies established prior to the deluge of supply washed into the credit markets last week are being reversed this morning as well – contributing in part to the early rally in the Treasury and mortgage-backed securities markets.

The mood of mortgage investors is changing as they sweat out their recent security purchases made at, or very near all-time historically high prices. From this point forward economic news that proves to be “less-bad” than expected will likely produce a much stronger move by investors to push prices down and note rates higher as they scramble to avoid the financial pain that will be inflicted on those caught holding a portfolio of low note-rate mortgages should the macro-economic news show potential improvement.

The slightly elevated August Retail Sales figures expected from the Commerce Department at 8:30 a.m. ET tomorrow have already been priced into the mortgage market. The modest improvement in the ex. auto component of this report was likely driven almost exclusively by back-to-school discounts from businesses and the impact of tax-free holidays in seventeen states designed to support retail sales. Mortgage investors will probably view this data as too distorted to provide a real sense of the current level of domestic consumerism. If so, this report will not likely influence the direction of mortgage interest rates one way or the other tomorrow. In the unlikely event the August Retail Sales figures exceed the consensus estimate -- look for investors to respond by pushing prices lower and note rates higher before the end of Tuesday’s trading session.

Daily Mortgage Market Information

2010-09-13T10:46:00.000-07:00

The credit market is undergoing a technically driven adjustment this morning as last week's $67 billion of Treasury obligations and the biggest supply of long-dated corporate debt issues since last March are redistributed by primary dealers and big-money center banks. Risk management strategies established prior to the deluge of supply washed into the credit markets last week are being reversed this morning as well - contributing in part to the early rally in the Treasury and mortgage-backed securities markets.

The mood of mortgage investors is changing as they sweat out their recent security purchases made at, or very near all-time historically high prices. From this point forward economic news that proves to be "less-bad" than expected will likely produce a much stronger move by investors to push prices down and note rates higher as they scramble to avoid the financial pain that will be inflicted on those caught holding a portfolio of low note-rate mortgages should the macro-economic news show potential improvement.

Texas Mortgage Estimates Contact Today!

Daily Mortgage Market Information

2010-09-09T11:30:00.000-07:00

The Labor Department announced this morning that the number of Americans standing in line to file first time claims for unemployment benefits dropped by an unexpected 27,000 during the week ended September 4^th. Last week's apparent improvement in the story from the labor sector sent mortgage investors racing to drop prices and nudge up note rates as a few rays of light filter though the darkness of their recessionary thinking.

As they say, the devil is in the detail - and in this case more than a few investors may choose to rethink their earlier decision to sell mortgage-backed securities aggressively this morning after they take the time to read the initial jobless claims report more closely.

It is worth noting that the Labor Department was quick to point out because of the Labor Day Holiday, nine states - including California - failed to file their jobless claims reports by the Labor Department's deadline - so government data wonks simply plugged in guesstimates for those non-reporting states. Once those states actually get around to filing their jobless numbers with the department - the jobless claims revisions over the next two weeks could be larger than normal.

Even assuming no revisions, 451,000 initial claims last week falls far short of indicating a recovery has begun in the labor market. Until/unless the total number of workers filing first-time unemployment claims drops below 400,000 on a multiple-week basis will it be reasonable to suggest the employment picture has brighten notably.

As it currently stands nearly 10 million people are drawing some form of unemployment benefit from the government - and several million more have exhausted their claims and now have no benefits at all. The "so what" factor here is dramatic - were the country gripped by a major recession and simply operating at what might be described as normal conditions - 2 million to 4 million people would be expected to be drawing unemployment insurance benefits. It is painfully obvious we still have a long way to go before the worst job market conditions since the Great Depression show notable signs of improvement.

Today's 30-year bond sale is the last of Uncle Sam's three debt auctions on tap this week. In light of this morning's better-than-expected news from the labor sector some market participants are concerned demand may not be strong enough to avoid the necessity of Uncle Sam "sweetening the pot" by accepting lower prices for these securities to attract the required capital. Should today's auction be more aggressively bid than most observers now anticipate - the chance for a little "relief" rally this afternoon in the mortgage market will improve dramatically.

Daily Mortgage Market Information

2010-09-08T12:56:00.000-07:00

Mortgage investors are standing around with their hands in their pockets this morning while they await the result of the Treasury Department's $21 billion 10-year note auction.

Today's 10-year note sale is the second of three auctions on tap this week. Some market participants are concerned demand may not be strong enough to avoid the necessity of Uncle Sam "sweetening the pot" by accepting lower prices for these securities to attract the required capital. Those concerns are probably misplaced - at least this time around.

The potential for a return of the sovereign European debt crisis to front page news is likely sufficient to drive significant amounts of international investors into the relative safe-haven of today's 10-year note offering. If so, this event will likely have little direct influence on the trend trajectory of mortgage interest rates. Should today's auction be more aggressively bid that most observers now anticipate - the chance for a little "relief" rally this afternoon in the mortgage market will improve dramatically. I am not necessarily expecting any developing rally in the mortgage market today to recover all of the slump we've experienced so far this morning (Fannie Mae 4.0% 30-year down 9/32^nds as I write) but it might come close to cutting the price loss so far today in half. The 10-year note auction will conclude at 1:00 p.m. ET and I'll post the results on my website as soon as possible once the final gavel falls.

As they do every Wednesday, the Mortgage Bankers of America have release their mortgage loan application index for the week ended September 3^rd. According to the MBA the overall number of mortgage applications drooped 1.5% -- with refinance requests slumping 3.1% while the purchase loan demand improved by 6.3%, marking the largest gain for this component of the overall index in more than three months. Refinance requests once again accounted for four out of every five loan applications for the week.

For Austin Texas Mortgage Information click here!

Daily Mortgage Market Information

2010-09-07T09:33:00.000-07:00

Judging by the early trading action in the mortgage market this morning -- investors seem to be indicating they where perhaps a little too aggressive with their response to last Friday's better-than-expected news from the labor sector. The August nonfarm payroll was certainly not as bad as many had anticipated - but it certainly was not good enough to suggest a period of robust job growth is just around the corner.

Renewed concerns regarding the potential redevelopment of a sovereign debt crisis in Europe together with a change in investors' thinking regarding the domestic economy has created a "flight-to-quality" buying spree that is packing enough financial firepower to be supportive of steady to fractionally lower mortgage interest rates today.

This afternoon's $34 billion 3-year note sale to be conducted by the Treasury Department should draw solid demand given the current market environment - rendering the event essentially "toothless" with respect to its potential impact on the trend trajectory of mortgage interest rates.

Daily Mortgage Market Information

2010-09-02T12:04:00.000-07:00

The mortgage market has had a terrific rally over the past month or so - with the contract rate for 30-year fixed-rate mortgages moving to a new all-time low. While historically low mortgage interest rates are good news for borrowers and mortgage originators - it is nervous news for mortgage investors since the price of the underlying mortgage-backed securities these investors are currently buying has just touched an all-time record high.

The growing for these buyers of mortgage-backed securities is that they will be caught holding the bag should the great rally in the mortgage market come to a sudden and screeching halt. In order for current buyers of mortgage securities to make a profit on their just completed transactions - by necessity they will have to find a ready, willing and able party eager to pay an even greater price for the same security. If this "greater fool" is nowhere to be found - current mortgage investors will quickly realize they have made a major financial blunder -- and will immediately begin scrambling to unload their mortgage assets as quickly as possible to minimize the financial pain. The more selling pressure this activity creates -- the more desperate sellers will become and the harder it will be to find buyers - a scenario, should it develop, marked by surging note rates.

Mortgage investors will be keenly attuned to tomorrow morning's August nonfarm payroll data. If the headline payroll number matches or exceeds the consensus estimate for a loss of 100,000 jobs -- and/or the national jobless rate creeps up 9.6% or higher -- mortgage investors will breathe a sigh of relief as mortgage interest rates trade steady to fractionally lower. Should the August nonfarm payroll report indicate 75,000 or fewer jobs were lost during the month -- and/or should the national jobless rate post a reading of 9.5% or lower -- the race for the market exists will be on - with mortgage interest rates moving higher and prices slumping sharply lower. This latter scenario carries a lower probability of actually occurring - though not so low that it can be discounted completely.

Daily Mortgage Market Information

2010-09-01T11:55:00.000-07:00

The Institute of Supply Management's Manufacturing Index showed surprising strength last month. This measure of activity at the nation's factories rose from a reading of 55.5 in July to 56.3 for August. The modest gain bucked investors' expectations for a gain in the very low 50's. The data suggests conditions in the manufacturing sector held up much better than anticipated last month. The manufacturing sector has now expanded for 13 straight months -- though the pace of growth has slowed noticeably during the last quarter. The ISM August data is at odds with recent regional reports from the Federal Reserve showing a far more notable slowdown in the manufacturing sector. It appears investors decided the mixed message with respect to activity levels at the nation's factories warrants the use of a "better-safe-than-sorry" pipeline risk management strategy this morning - an event that has created the move to lower rate sheet prices in today's early going.

The survey for the week showed all mortgage applications edged 2.7% higher on a week-over-week basis. The refinance index climbed 2.8% while the purchase index showed a gain of a more modest 1.8% for the week. Refinance applications accounted for about 83% of all applications and more than 80% of the prospective loan volume.

Daily Mortgage Market Information

2010-08-31T09:56:00.000-07:00

The mortgage market is simply treading water today as investors await Friday's August nonfarm payroll report.

This morning's August consumer confidence report showed a modest improvement over the five-month low set last month and drew little more than a passing glance from market participants. The modest rise in consumer's attitudes was really nothing to get excited about since it amounted to nothing more than a very small upswing from a very dismal month earlier level.

Investors fretting over the pace of the economic recovery will be closely attuned to any tidbit of insight that may be available in the minutes of the Federal Open Market Committee's August 10^th meeting (scheduled for release at 2:00 p.m. today). Though the document will be picked apart on word-by-word basis, investors are unlikely to find anything that will provide them with an improved perspective on the state of the economy or an indication of a meaningful shift in the Fed's current monetary policy strategy. If my assessment proves accurate, this event will have little, if any discernable impact on the current trend trajectory of mortgage interest rates.

Daily Mortgage Market Information

2010-08-30T09:42:00.000-07:00

The Commerce Department reported this morning that income and spending grew slightly in July while inflation pressures at the consumer level were benign.

Personal incomes grew by 0.2% last month while spending rose by 0.4%. The Fed's preferred measure of consumer price inflation, the personal consumption expenditure index, a separate component of the income and spending report, rose 0.1% in July and was up a meager 1.4% on a year-over-year basis. With personal savings continuing to hover near 6.0%, it is clear consumers are focusing on getting their finances in order rather than aggressively increasing their spending. Rising personal savings suggests to many analysts the engine that drives more than 70% of our domestic economic activity is likely to perform below its potential for months yet to come.

Against such an economic backdrop stocks will likely continue to slump as capital flows from riskier asset classes into the safest investment vehicles available. The good news here is that for the time-being, dollar denominated assets like Treasury obligations and mortgage-backed securities are about the-only-game-in-town that perfectly fits the "safe haven" requirement for both domestic and global investors. As long as this condition prevails it will tend to support the prospects for steady to perhaps fractionally lower mortgage interest rates.

Rates are going higher

2010-08-27T09:43:00.000-07:00

The mortgage market is being pounded by profit-taking this morning as investors react to news indicating overall economic growth in the second-quarter was not as weak as many had anticipated. Comments from Fed Chairman Bernanke indicating the Fed is prepared to take additional action if need be to restart the nation’s economic engines simply added a little fuel to the fire.

The current mindset among mortgage investors toward today’s revised second-quarter Gross Domestic Product appears to revolve around the idea that while the component numbers weren’t particularly good – they were at least better than most had expected. Real GDP increased at an annualized rate of 1.6% in the second quarter – revised down from first estimates for growth of 2.4% -- but ahead of the consensus forecast calling for a headline GDP number of 1.4%. The stir the revised second-quarter GDP numbers are creating in the mortgage market will probably fade pretty quickly as calmer, cooler heads point out that until labor market weakness shows signs of improving; overall economic growth will remain desperately anemic. But that is a story for another day.

Looking ahead to next week every scheduled report – from Monday’s July Personal Income and Spending data through the late-week release of the Institute of Supply Management’s Manufacturing and Service Sector Index values will take a backseat to the August Nonfarm Payroll figures scheduled to hit the newswires Friday morning at 8:30 a.m. ET. Mortgage investors have already priced in expectations for a headline nonfarm payroll decline of 100,000 – a number likely sufficient to nudge the nation’s unemployment rate up to 9.6%. Numbers that match or fall below the consensus estimate for these two major components of the August jobs report will tend to support steady to perhaps fractionally higher mortgage interest rates. Should one or both components exceed the consensus estimate -- look for mortgage investors to respond by pressing note rates a bit lower.

www.McDougallMortgages.com

Daily Mortgage Market Information

2010-08-26T09:07:00.000-07:00

Mortgage investors largely shrugged off this morning's data from the Labor Department showing the number of American workers filing for first-time jobless benefits fell by 31,000 during the week ended August 21^st.

This freshly updated story from the labor sector has done nothing to resolve the debate currently raging among market participants over whether mortgage interest rates have moved to unsupportable levels - or whether the steady drumbeat of poor economic data and the seemingly insatiable appetite for safe-haven debt from domestic and foreign long-term investors will be strong enough to push home financing rates to astonishing new lows. The jobless claims data series of late has certainly proven mixed enough to support both sides of the argument. Looking at the reams of other data pointing at a stumbling economy -- I personally see a number of reasons to believe the threat of notably higher mortgage interest rates is not imminent just yet.

Uncle Sam will round out this week's four-part borrowing spree with the sale of a $29 billion stack of 7-year notes this afternoon. Tuesday's 2-year note offering and Wednesday's 5-year note offering were each sold at record low yields, and there is little reason to expect demand will not be solid at today's auction as well. If my assessment proves accurate, this event is unlikely to create much, if any reaction in the mortgage market.