Yesterday we saw our market fall 11 ticks, which really singalled that we were in a downtrend which was likely to continue until some tape hit that stuck and affirmed our economy was not is as good of shape as the media likes to portray. Today we are currently up 10 ticks with investors returning to our market with consumer confidence way, WAY down.
Where we sit now consumer confidence was measured at 44.5, down from 59 last month. The media is already spinning this low number off as an effect of the debt debate fought last month. Perhaps there is some merit to this rationale, but in all sincerity the problem is far deeper and much more serious than they are willing to give credit.
This recovery today however does not mean we are out of the thicket. On the contrary, this upswing will definitely help rate and pricing but it alone is not enough to send us back into the low rate environment we all hope to see once again.
Unfortunately because the equities market is what most media outlets focus on, they also focus on how to get the equities market to post gains, which makes everyone feel warm and cuddly. Well, everyone but us who would like to see the long term markets rally which usually comes at the expense of equities. Why the long terriddle? Becuase as I type the media is doing everything in their power to push QE3, becuase it is their expectation that more money in the system means equities will post gains and they can feel warm and cuddly again at least for the time being.
Realistically QE3 could mean doom for our economy and markets as it forces the US dollar off a cliff and into oblivion to be remembered along with the Continental. This is the fear, and if the Fed is not careful, very soon we'll all be enjoying a 20 dollar loaf of bread along with our 10 dollar cup of coffee and 40 dollar gallon of gasoline. If this comes to pass, I assure you rates will no longer be in the 4s, or even the 5s, or 6s... Think days of Jimmy Carter - 16, 17, 18 percent.
Scary times we live in.
Which is why securing the right financing and locking in a low fixed rate now, while home loan interest rates are still in the low to mid 4s is literally one of the smartest financial decisions one can make at this point in time.
Post your questions, post your comments, call me crazy... time will sort all out.
Tuesday, August 30, 2011
Monday, August 29, 2011
MBS... More than a Case of the Mondays
In everyone's favorite cubical movie "Office Space" our protagonist is accused of having a case of the Mondays when he doesn't show up his chipper self when arriving at the office. For those who have seen the movie, I don't need to tell you, he doesn't have a case of the Mondays. he truly loaths his job and is simply acting how he always feels.
This may also be the case with the mortgage backed securities market which after a couple days in the green has turned around and sold off all recent gains and then some. At this point in time there is a clear down trend in the MBS markets which is forcing interest rates up. Investors are looking other places for returns, and it appears as if this trend is going to continue.
With the stock market moving forward and posting gains as if everything was as it should be, there is little reason for anyone to sit out the rally, and the fear that brought people into our long term market has wained and they're moving back into the short term markets at the expense of the long term bond markets.
The effect is immediate and interest rates through reprices have slowly but surely trickled back up. It's unfortunate because most people looking to take advantage of these low rates are going to be stuck either closing on a rate that is much higher than they had hoped, not closing at all, or waiting in hopes the market returns.
It is this third option that I find the most interesting. Considering the guidelines for approval right now, you really need to be an A-paper borrower to secure these best and lowest rates which means documenting income, assets, etc... Most A-paper borrowers refinanced last year when they had the chance to secure these low rates in 2010. This time around they are simply trying to improve their position. This means these higher rates currently available are of no interest to these clients... tehy already have a great rate... which means not closing (at the current pricing) or waiting it out to see if they drop back down.
I anticipate when loan volume drops off a cliff, which it will in the near future due to rates rising, banks will have no choice but do what they can to lower rates and entice borrowers back to the finance table.
For now, we're trading in a range that is producing rates higher than they have been in recent weeks. Hopefully after labor day, when banks recognize they are not closing the loans underwritten before labor day, they'll cut into their profit margin and do what they can to reduce rates.
Let's hope secondary cooperates and the mortgage backed securities market rallies hard on the buy side.
This may also be the case with the mortgage backed securities market which after a couple days in the green has turned around and sold off all recent gains and then some. At this point in time there is a clear down trend in the MBS markets which is forcing interest rates up. Investors are looking other places for returns, and it appears as if this trend is going to continue.
With the stock market moving forward and posting gains as if everything was as it should be, there is little reason for anyone to sit out the rally, and the fear that brought people into our long term market has wained and they're moving back into the short term markets at the expense of the long term bond markets.
The effect is immediate and interest rates through reprices have slowly but surely trickled back up. It's unfortunate because most people looking to take advantage of these low rates are going to be stuck either closing on a rate that is much higher than they had hoped, not closing at all, or waiting in hopes the market returns.
It is this third option that I find the most interesting. Considering the guidelines for approval right now, you really need to be an A-paper borrower to secure these best and lowest rates which means documenting income, assets, etc... Most A-paper borrowers refinanced last year when they had the chance to secure these low rates in 2010. This time around they are simply trying to improve their position. This means these higher rates currently available are of no interest to these clients... tehy already have a great rate... which means not closing (at the current pricing) or waiting it out to see if they drop back down.
I anticipate when loan volume drops off a cliff, which it will in the near future due to rates rising, banks will have no choice but do what they can to lower rates and entice borrowers back to the finance table.
For now, we're trading in a range that is producing rates higher than they have been in recent weeks. Hopefully after labor day, when banks recognize they are not closing the loans underwritten before labor day, they'll cut into their profit margin and do what they can to reduce rates.
Let's hope secondary cooperates and the mortgage backed securities market rallies hard on the buy side.
Friday, August 26, 2011
Small Recovery Mounting... Two Days in the Green
Mortgage interest rates are starting to turn the corner and have begun falling once again after a couple days of gains in the MBS markets. Yesterday (sorry I missed posting) we ended up 6 ticks, and today we are currently up 6 ticks... assuming today's gains hold or improve further we will finally see support to a long sell off that has cost us over one full point in secondary.
Rates today are definitely better than they were yesterday, but lenders are still reluctant to give borrowers everything due, and rate sheets remain somewhat bleak considering where we stand in secondary. It is my hope that as pipelines clear from the recent wave of refinances, and lenders have more to lend as these tradelines clear, we will see rate sheets reflect better pricing as they try and entice people into pulling the trigger.
It is an interesting day with Bernanke having spoke at Jackson Hole and having nothing really to say other than we're prepared to act if necessary. Personally I think the Fed is causing more problems than it is solving right now. For example QE3, it is thought that if we have an liquidity problem, the Fed will start QE3 which means dumping more money into the economy and eroding the value of the dollar (inflation).
In other words, if people choose to save instead of spend, we'll have to spend for them.
What the hell is that!!! Perhaps the problem is the fact that we as a society have spent too much and need to start saving. Perhaps prices are too high to begin with and a little deflation would be healthy for society... Perhaps... is not something the Fed is concerned with, in fact I would argue they are not even concerned with making sure our economy recovers. They are concerned with protecting government interests and the current power structure. Which is why it makes sense that they would spend if we choose not to. They need money to continue to inflate so the debt our country has incurred can be paid off in dollars worth less than originally borrowed. It is the only logical conclusion, and a scary one that doesn't end well for the average person.
Man did I slide down the rabbit hole on this one.
Rates today are definitely better than they were yesterday, but lenders are still reluctant to give borrowers everything due, and rate sheets remain somewhat bleak considering where we stand in secondary. It is my hope that as pipelines clear from the recent wave of refinances, and lenders have more to lend as these tradelines clear, we will see rate sheets reflect better pricing as they try and entice people into pulling the trigger.
It is an interesting day with Bernanke having spoke at Jackson Hole and having nothing really to say other than we're prepared to act if necessary. Personally I think the Fed is causing more problems than it is solving right now. For example QE3, it is thought that if we have an liquidity problem, the Fed will start QE3 which means dumping more money into the economy and eroding the value of the dollar (inflation).
In other words, if people choose to save instead of spend, we'll have to spend for them.
What the hell is that!!! Perhaps the problem is the fact that we as a society have spent too much and need to start saving. Perhaps prices are too high to begin with and a little deflation would be healthy for society... Perhaps... is not something the Fed is concerned with, in fact I would argue they are not even concerned with making sure our economy recovers. They are concerned with protecting government interests and the current power structure. Which is why it makes sense that they would spend if we choose not to. They need money to continue to inflate so the debt our country has incurred can be paid off in dollars worth less than originally borrowed. It is the only logical conclusion, and a scary one that doesn't end well for the average person.
Man did I slide down the rabbit hole on this one.
Wednesday, August 24, 2011
Bleeding To Death Slowly
Home loan interest rates continue to trickle back up as the mortgage backed securities market continues to sell off. It's been a troubling week and last few days, all of which have ended down forcing yields and rates higher. It all began last Friday when we lost 8 ticks, then another 8 ticks on Monday, then another 9 on Tuesday, now we're down 10 ticks... add it all up, and we've lost over a point in secondary.
This does not bode well for rates (if you haven't picked that up yet) and the sell off is starting to look like a trend as we bust through support levels without blinking and fall off the cliff's edge like lemmings (which apparently is not true). Lemmings... that's what investors feel like right now as they run from the long term markets, day after day after day.
Ultimately I do not expect this bleeding to stop until the Fed Chairman comes out of his cave rolls his eyes to the left signalling, much like the groundhog, this recession will continue, and then disappears again to enjoy the finer things in life. Okay, okay, he's not quite that cryptic, but my point has been made, the Fed holds all the cards and is in control of the show. We're essentially waiting on good old Ben to say what he's got to say on Friday, and hope it jives with our market. If it does, we'll see the money come pouring back in, if it doesn't we'll see the sell off continue in far faster form.
Terrible to think one man has that much control over literally trillions of dollars and how they are invested... honesty, if they would stop tinkering and just let the market sort itself out... we'd probably be better off. But alas, Ben is due to the microphone, and the press won't let him miss that date, so the cycle continues, which probably means more stimulus (that's all these clowns know how to do), which means more money which means higher rates due to inflation.
Friday... is do or die day... Let's hope Ben eats his Wheaties and has a Yoda moment.
This does not bode well for rates (if you haven't picked that up yet) and the sell off is starting to look like a trend as we bust through support levels without blinking and fall off the cliff's edge like lemmings (which apparently is not true). Lemmings... that's what investors feel like right now as they run from the long term markets, day after day after day.
Ultimately I do not expect this bleeding to stop until the Fed Chairman comes out of his cave rolls his eyes to the left signalling, much like the groundhog, this recession will continue, and then disappears again to enjoy the finer things in life. Okay, okay, he's not quite that cryptic, but my point has been made, the Fed holds all the cards and is in control of the show. We're essentially waiting on good old Ben to say what he's got to say on Friday, and hope it jives with our market. If it does, we'll see the money come pouring back in, if it doesn't we'll see the sell off continue in far faster form.
Terrible to think one man has that much control over literally trillions of dollars and how they are invested... honesty, if they would stop tinkering and just let the market sort itself out... we'd probably be better off. But alas, Ben is due to the microphone, and the press won't let him miss that date, so the cycle continues, which probably means more stimulus (that's all these clowns know how to do), which means more money which means higher rates due to inflation.
Friday... is do or die day... Let's hope Ben eats his Wheaties and has a Yoda moment.
Tuesday, August 23, 2011
Zero Sum Day... MBS Consolidates
Today has been a relatively uneventful day in the mortgage backed securities market. Currently we are even on the day, but that doesn't sum up the volatility we have experienced in the opening hours of trading. Up down, up down, has been the pattern... which leads us to believe investors are a little unsure where they should park their capital.
All in all, it is an interesting week. In the aftermath of the downgrade, we have seen our markets even out slightly. Currently sitting at 104 flat on the 4.0 coupon... we're at a tipping point. Gains would reinforce this point as support, while a sell off would signal this as a point of resistance. The danger we face in today's market is nothing new and has been the ongoing trend now for the last couple of years.
Long term, I expect rates to remain low, short term they move lower or higher at this point in time... in times of consolidation... anything is possible.
Even so, lenders have been slow to give us what is rightfully due, and there is substantial gains baked in the their rate sheets. In other words, pricing should be better than what is currently offered based on the market. Because lenders are hedging, we do have some room, but nothing that is at all comfortable.
Right now we need gains in secondary to reinforce our current position and these low rates. If we don't get it, we may see rates climb back up before coming back down for the winter months, if they come back down at all.
Right now I would say are biggest fear is inflation... and with that fear comes the possibility of the Fed starting a QE3... bad news for us if it happens... bad news for inflation which is our arch nemesis. What we hope comes out of the summit at weeks end is the Fed doing nothing but affirming their keeping rates low. The last thing we need right now is more money infused into our economy... which means inflation... In addition we could use a couple of riots in Europe, or someone in the EU asking for a bailout... Calamity in Europe coupled with austerity in the US... this would be the best recipe for us moving forward.
We shall see.
All in all, it is an interesting week. In the aftermath of the downgrade, we have seen our markets even out slightly. Currently sitting at 104 flat on the 4.0 coupon... we're at a tipping point. Gains would reinforce this point as support, while a sell off would signal this as a point of resistance. The danger we face in today's market is nothing new and has been the ongoing trend now for the last couple of years.
Long term, I expect rates to remain low, short term they move lower or higher at this point in time... in times of consolidation... anything is possible.
Even so, lenders have been slow to give us what is rightfully due, and there is substantial gains baked in the their rate sheets. In other words, pricing should be better than what is currently offered based on the market. Because lenders are hedging, we do have some room, but nothing that is at all comfortable.
Right now we need gains in secondary to reinforce our current position and these low rates. If we don't get it, we may see rates climb back up before coming back down for the winter months, if they come back down at all.
Right now I would say are biggest fear is inflation... and with that fear comes the possibility of the Fed starting a QE3... bad news for us if it happens... bad news for inflation which is our arch nemesis. What we hope comes out of the summit at weeks end is the Fed doing nothing but affirming their keeping rates low. The last thing we need right now is more money infused into our economy... which means inflation... In addition we could use a couple of riots in Europe, or someone in the EU asking for a bailout... Calamity in Europe coupled with austerity in the US... this would be the best recipe for us moving forward.
We shall see.
Monday, August 22, 2011
Slow Start for Mortgage Rates This Week
Whenever we see a strong sell off on the equities markets on a Friday I worry about Monday's open in the securities markets. Today is a perfect example of why. After the stock market took a nasty tumble last Friday, I thought we may see a rebound today, which as it turns out was in fact correct. This rebound however spits in the face of our mortgage backed securities market which, is losing ground in response to the rally we're seeing in the stock market.
We're still in comfortable territory considering the gains we have experienced in the last couple of weeks, and our being down only 3 ticks today after losing 10 ticks on Friday is not a sign the that the atmosphere is on fire, and we'll be out of oxygen by days end. It does suggest that we are at a point of resistance, and will need to break through if rates are going to get any lower. This means the ten year yield needs to drop below 2.10 and eventually 2.00 if we are going to see mortgage rates continue to fall.
In addition we need the Fed to make a statement that work sin our favor later this week. What we do not want to hear is any sort of talk suggesting they are gearing up for another round of quantitative easing, or QE3 as it is humbly referred to in the media outlets. QE3 is essentially the Fed inflating its way out of the trouble by injecting money into our markets. The injection, good for stocks, bad for interest rates, will encourage people to dump their mortgage backed securities holdings and return to the stock market which would force rates back up immediately. In addition it would lead to higher costs for the day to day goods we need to live.
QE3 - an evil plan that should be killed and put to rest immediately without further consideration.
Let's hope this is their position.
All in all our market is holding but bleeding slightly, pay attention to the wound and make sure it doesn't get any larger.
We're still in comfortable territory considering the gains we have experienced in the last couple of weeks, and our being down only 3 ticks today after losing 10 ticks on Friday is not a sign the that the atmosphere is on fire, and we'll be out of oxygen by days end. It does suggest that we are at a point of resistance, and will need to break through if rates are going to get any lower. This means the ten year yield needs to drop below 2.10 and eventually 2.00 if we are going to see mortgage rates continue to fall.
In addition we need the Fed to make a statement that work sin our favor later this week. What we do not want to hear is any sort of talk suggesting they are gearing up for another round of quantitative easing, or QE3 as it is humbly referred to in the media outlets. QE3 is essentially the Fed inflating its way out of the trouble by injecting money into our markets. The injection, good for stocks, bad for interest rates, will encourage people to dump their mortgage backed securities holdings and return to the stock market which would force rates back up immediately. In addition it would lead to higher costs for the day to day goods we need to live.
QE3 - an evil plan that should be killed and put to rest immediately without further consideration.
Let's hope this is their position.
All in all our market is holding but bleeding slightly, pay attention to the wound and make sure it doesn't get any larger.
Friday, August 19, 2011
Rates Fighting to Stay Low
There is definitely some resistance in the mortgage backed securities markets these days. Yesterday after suffering major losses in the stock market, mortgage backed securities only added 3 ticks. Today, another down day for stocks and we are in the red, currently down 2 ticks... but have been down as many as 8 ticks.
This is mixed news for interest rates. yes we are at historic highs which means rates are as low as they have ever been. But, with the market flailing a little lenders will hedge on the side of caution and rate sheets will not be as favorable as they could be. Moreover, those that have just begun refinancing may not have enough time to lock and close in the desired rate that convinced them to move forward in the first place.
We're not there yet, but this is something that people must be vigilant about, that means paying attention to rates on a daily basis, and not simply assuming you're "good to go." Everyone looking to take advantage of this market, from originators to borrowers should be working as hard and as fast as possible to complete the work needed to be done to lock in and fund their new loan.
Remember you ain't got squat until its recorded.
This is mixed news for interest rates. yes we are at historic highs which means rates are as low as they have ever been. But, with the market flailing a little lenders will hedge on the side of caution and rate sheets will not be as favorable as they could be. Moreover, those that have just begun refinancing may not have enough time to lock and close in the desired rate that convinced them to move forward in the first place.
We're not there yet, but this is something that people must be vigilant about, that means paying attention to rates on a daily basis, and not simply assuming you're "good to go." Everyone looking to take advantage of this market, from originators to borrowers should be working as hard and as fast as possible to complete the work needed to be done to lock in and fund their new loan.
Remember you ain't got squat until its recorded.
Thursday, August 18, 2011
A Rickety Start For MBS on What Should Be An Epic Day
Even though we are up 6 ticks on the days trading, it's been a volatile morning two and a half hours into trading. Our market, up sharply on the poor manufacturing news has been in a downtrend since. Although I don't want anyone to panic, this downtrend is very controlled, at least for the time being, and it could be investors feeling out the market and making sure there is support before re-entering and forcing the price higher and yields lower.
All things considered an up day is never anything to complain about, especially considering the fact that we're approaching historic highs. For those skeptics out there, this is why interest rates can now be secured at 4.25% with no cost... subject to credit approval of course. The point is while many wonder what they can do in this dismal economic situation. They rarely consider the benefits of securing a fixed rate that is this low. During a time when everyone is concerned about safe investments, and flights to safety, safe harbors, I can think I few better places than the home you live in and the cost associated with the property. Reducing this expense and fixing it for the duration of the term is probably one of the wisest financing decisions one can make at this particular time.
All things considered an up day is never anything to complain about, especially considering the fact that we're approaching historic highs. For those skeptics out there, this is why interest rates can now be secured at 4.25% with no cost... subject to credit approval of course. The point is while many wonder what they can do in this dismal economic situation. They rarely consider the benefits of securing a fixed rate that is this low. During a time when everyone is concerned about safe investments, and flights to safety, safe harbors, I can think I few better places than the home you live in and the cost associated with the property. Reducing this expense and fixing it for the duration of the term is probably one of the wisest financing decisions one can make at this particular time.
Wednesday, August 17, 2011
Breakout to the Upside...
I have to admit sometimes glory is found in being wrong. Yesterday I prophecized that we were moving into a breakout which I expected would be to the downside raising yields and interest rates. Well, it came sooner than I expected and brokeout to the upside.
Yesterday we saw an 11 tick gain by the end of trading, and after starting down in the early morning hours today, we have moved to the upside, now trading 5 ticks in the green. Again for any newbies, gains in the secondayr market lead to low yields paid to the investors. The yields have a direct correlation to the interest rates offered to borrowers... hence the name mortgage backed securities. In other words, gains lead to lower yields, which lead to better interest rates for homeowners in the market.
This breakout to the upside is not just good for rate sheets today, it also shows signs that our market is still in an uptrend, wihch means support fo rthe interest rates being offered. I seriously about that we are going to see a major sell off that will lead rates back into the 5.000s anytime soon. Of course we need to pay attention to the 10 year, should that yield rise back up we will see our market retreat, although I do not this this is going to happen at a sharp pace.
At this point in time, I'll confident calling the all clear on interest rates and their remaining low until at least labor day weekend. When the long weekend comes it will be interesting to se how our market reacts and if rates move. Not going to get into the "whys" on this at this point in time, just want to throw out that fact that if you're working on a refinance at this point in time, you should be safe floating for now, but as labor day approaches, prepare to lock.
Yesterday we saw an 11 tick gain by the end of trading, and after starting down in the early morning hours today, we have moved to the upside, now trading 5 ticks in the green. Again for any newbies, gains in the secondayr market lead to low yields paid to the investors. The yields have a direct correlation to the interest rates offered to borrowers... hence the name mortgage backed securities. In other words, gains lead to lower yields, which lead to better interest rates for homeowners in the market.
This breakout to the upside is not just good for rate sheets today, it also shows signs that our market is still in an uptrend, wihch means support fo rthe interest rates being offered. I seriously about that we are going to see a major sell off that will lead rates back into the 5.000s anytime soon. Of course we need to pay attention to the 10 year, should that yield rise back up we will see our market retreat, although I do not this this is going to happen at a sharp pace.
At this point in time, I'll confident calling the all clear on interest rates and their remaining low until at least labor day weekend. When the long weekend comes it will be interesting to se how our market reacts and if rates move. Not going to get into the "whys" on this at this point in time, just want to throw out that fact that if you're working on a refinance at this point in time, you should be safe floating for now, but as labor day approaches, prepare to lock.
Tuesday, August 16, 2011
A consolidating mortgage market
Yesterday, despite the indicators moving against us, the mortgage backed securities market showed incredible resilience losing only 3 ticks over the course of trading. This morning, we are up three ticks, putting as back in familiar territory. That is not a reason to sounds the all clear. With our market consolidating, it appears as though we are heading for a breakout which will lead us high into a new range or lower into a more historic range.
At this point in time, I'm leaning towards the sell off. Call me a pessimist but the reaction to the downgrade was compulsory. Investors flocked to the very investment that was downgraded... and fortunately we benefited from this yield reduction with the MBS tracking the 10 year treasury closely. We all know this downgrade will lead to higher interest rates, the question is when. This consolidation could be the beginning to the perpetual slide we all fear.
Yes the Fed has announced they will keep rates pegged low through 2013, which is an unprecedented event (their dating a future action), but this announcement may not be enough to do the trick, and when investors do decide to sell off, I do not think the Fed is going to be able to say or do anything to stop them.
At this point in time, I'm leaning towards the sell off. Call me a pessimist but the reaction to the downgrade was compulsory. Investors flocked to the very investment that was downgraded... and fortunately we benefited from this yield reduction with the MBS tracking the 10 year treasury closely. We all know this downgrade will lead to higher interest rates, the question is when. This consolidation could be the beginning to the perpetual slide we all fear.
Yes the Fed has announced they will keep rates pegged low through 2013, which is an unprecedented event (their dating a future action), but this announcement may not be enough to do the trick, and when investors do decide to sell off, I do not think the Fed is going to be able to say or do anything to stop them.
Monday, August 15, 2011
Mortgage Rates Hold
With the equities markets showing signs of life, the long term bond market, one would expect, would be suffering with yields rising. This however is not that case, and our bond market is holding strong, actually up one tick on the day. Considering an up day last Friday, after a large sell off last Thursday today's resistance to a sell off is very telling, and infers support at our current levels. A couple more days of support like this and a headline that speaks to a negative economy and we would see mortgage backed securities post some serious gains, forcing yields down. Of course the opposite is also true, a headline that suggests a strong economy would most likely lead to a sell off, breaking current support levels leading us to higher rates.
At this point in time, either of these futures is possible (of course), and for this reason we are recommending those that are in the process take advantage of the market and lock now to ensure they do not lose anything trying to wait out a better rate. If we are wrong and rates do in fact improve, renegotiating into a better rate would be an option to explore - so you do have options after locking... The point is, with our market consolidating as it has, we are in a difficult position moving forward. Sitting on yearly highs and close to historic highs, there is more pressure to sell off then there is to buy in, and as long as the 10 year yield is above 2.25 we're stuck... honestly we would need to see the 10 year drop to 2.10 or even 2.00 for us to see a strong surge in mortgage backed securities. At this point in time we're happy with the market holding, and hope everyone that can benefit from a 4.25% 30 year fixed does so, because those are the going rates in CA. Contact us for more details and what it takes to qualify.
At this point in time, either of these futures is possible (of course), and for this reason we are recommending those that are in the process take advantage of the market and lock now to ensure they do not lose anything trying to wait out a better rate. If we are wrong and rates do in fact improve, renegotiating into a better rate would be an option to explore - so you do have options after locking... The point is, with our market consolidating as it has, we are in a difficult position moving forward. Sitting on yearly highs and close to historic highs, there is more pressure to sell off then there is to buy in, and as long as the 10 year yield is above 2.25 we're stuck... honestly we would need to see the 10 year drop to 2.10 or even 2.00 for us to see a strong surge in mortgage backed securities. At this point in time we're happy with the market holding, and hope everyone that can benefit from a 4.25% 30 year fixed does so, because those are the going rates in CA. Contact us for more details and what it takes to qualify.
Friday, August 12, 2011
Mortgage Rates Fall Yet Again
Yesterday was a telling day for us. Yes we lost 23 ticks in secondary which led to many reprices for the worse from all lenders. This sell off was in large part to the rally that the stock market enjoyed. Couple this with the fact that we were sitting at the top of the world on this years highs, and higher than any given point in the last year, investors were inclined to do a little profit taking and our market suffered because of it.
Down 23 ticks off the high is a little discerning for even the thick skinned. Today was going to be a day of reckoning, wondering which way the market would turn. Fortunately we turned back up and the mortgage backed securities market is currently up 17 ticks on the day, nearly erasing yesterdays losses in the early trading hours.
Probably due to consumer sentiment falling in today's reports, these gains reaffirm our position in the MBS and serve as support for the following trading days to come. This point is reaffirmed by the fact that all coupons expect the 5.5 are trading higher. This is a strong sign the the mortgage backed securities market is healthy and thriving.
For this reason I expect rates to stay low despite the volatility. Right now make sure you are prepared to weather large swings and simply choose the right day to lock.
Down 23 ticks off the high is a little discerning for even the thick skinned. Today was going to be a day of reckoning, wondering which way the market would turn. Fortunately we turned back up and the mortgage backed securities market is currently up 17 ticks on the day, nearly erasing yesterdays losses in the early trading hours.
Probably due to consumer sentiment falling in today's reports, these gains reaffirm our position in the MBS and serve as support for the following trading days to come. This point is reaffirmed by the fact that all coupons expect the 5.5 are trading higher. This is a strong sign the the mortgage backed securities market is healthy and thriving.
For this reason I expect rates to stay low despite the volatility. Right now make sure you are prepared to weather large swings and simply choose the right day to lock.
Thursday, August 11, 2011
Mortgage Rates Show Support in Face of Adverse Market
It is no mystery, when the stock market does well, bond markets have a tendency to sell off, which leads to higher interest rates. With this basic understanding logic would suggest the bond markets would be selling off strongly in the wake of large gains in the stock market today. As fate would have it, currently we are seeing a small sell off, but nothing anyone could define as substantial. In fact, there appears to be support in the mortgage backed securities market at this time, with it only trading down 10 ticks on the day. Of course we have a few hours left to trade and the sell off could continue, the point is at this time we would expect to see larger losses in secondary based on the gains in the stock market.
Why the support? It would seem that European woes are leading people to our bond markets. Despite the downgrade US debt and mortgage backed securities is still the safe harbor play. With other harbors facing choppy water, we're the best play in town. At this point in time, it is clear mortgage rates will stay low moving into the future. Yes we've seen a small sell off today, but the sentiment is strong and resounding... long term markets currently offer the safety and return investors are looking for. Until the stock market settles and the VIX comes down, we're to be able to enjoy this low rate environment.
Why the support? It would seem that European woes are leading people to our bond markets. Despite the downgrade US debt and mortgage backed securities is still the safe harbor play. With other harbors facing choppy water, we're the best play in town. At this point in time, it is clear mortgage rates will stay low moving into the future. Yes we've seen a small sell off today, but the sentiment is strong and resounding... long term markets currently offer the safety and return investors are looking for. Until the stock market settles and the VIX comes down, we're to be able to enjoy this low rate environment.
Wednesday, August 10, 2011
Mortgage Rates Moving Lower
There was some question as to whether or not this rally could sustain itself and as we approached historical resistance levels, it became apparent that these levels of resistance were not going to be a factor this time around.
Currently we are up 29 ticks on the day and the rally continues... Below is a long term graph of the mortgage backed securities market. As you can see we've broken through to new highs... and new highs mean lower interest rates. But before you run off and lock, or start your refinance for that matter, keep in mind it typically takes a few days before lenders are willing to give it up. Yes, some may call them prude, others conservative. Whatever adjective you choose to describe your lender, remember we need these levels to hold for a day or two at which time rate sheets will have these gains represented. Currently lenders definitely owe us something... I know something is not very helpful, but something is better than nothing and it is nice knowing that even if this market sells off slightly current rates should not be affected to badly due to lenders hedging.
All things considered this is going to force turn times to lengthen which will complicate transactions and the speed in which they are underwritten and funded. Brokers have the advantage in this regard being able to place loan with lenders that have staffed up for the demand or are running at shorter turntimes. Couple this with the wholesale rates available and brokers look pretty attractive as a financing solution right now in comparison to the cookie cutter retail banks.
Now is an excellent time to discuss your options, and we look forward to hearing from you. Click on the links to find our website and contact us immediately to determine just how much money a refinance can save you. I think you will be surprised.
Tuesday, August 9, 2011
Mortgage Rates Fall in Wake of US Downgrade
Mortgage interest rates appear to be falling in the wake of the S&P downgrade, leading some to wonder just what to make of all this. Honestly it is a little perplexing if you think about it... S&P downgrades, US government debt, Fannie Mae and Freddie Mac along with a slue of other entities, and what happens... the private markets sell off and the downgraded debt rallies into higher territory.
The following day (today) we watch the stock market ping pong between gains and losses while the mortgage backed securities market rallies from lows (8 ticks down) to up 33 ticks on the day... that's 1:01, or a full point for those that don't speak technical.
A strange world we live in and its clear investors are as puzzled as the rest of us. This is the markets reacting to just that, no one knows where to put their money, yet no one wants to earn nothing on their money so they're scrambling for cover and whatever exits show some return with little to no risk. A difficult position to find, a point affirmed by the Fed today by their expressing the will to keep rates low for an extended period yet again...
The low rate environment doesn't seem to be working the magic they had hoped it would, and our economy is teetering once again on a perilous slide down eroding wealth along the way. Of course those in power will stop at nothing to make sure this doesn't happen. Unfortunately that means infusing more capital, which means inflation... something no one wants to talk about but everyone knows is a real and looming problem.
There is no way out of this corner without some bruises... and it's going to be some time before this market works itself out. Right now there is a simple relief for homeowners which is taking advantage of the low rate environment. With mortgage backed securities trading at near record highs, interest rates for homeowners are near record lows. That means pleasant salvation for anyone that missed the chance to refinance last year when we hit historic lows. The carnival is back in town and the rates are as good now as they have ever been, so if you can find your way through the all the red tape and qualify now's the time to have at it.
Of course I'm here to help anyone that needs it, and my interpretation of the market will continue to be made available through this blog.
The following day (today) we watch the stock market ping pong between gains and losses while the mortgage backed securities market rallies from lows (8 ticks down) to up 33 ticks on the day... that's 1:01, or a full point for those that don't speak technical.
A strange world we live in and its clear investors are as puzzled as the rest of us. This is the markets reacting to just that, no one knows where to put their money, yet no one wants to earn nothing on their money so they're scrambling for cover and whatever exits show some return with little to no risk. A difficult position to find, a point affirmed by the Fed today by their expressing the will to keep rates low for an extended period yet again...
The low rate environment doesn't seem to be working the magic they had hoped it would, and our economy is teetering once again on a perilous slide down eroding wealth along the way. Of course those in power will stop at nothing to make sure this doesn't happen. Unfortunately that means infusing more capital, which means inflation... something no one wants to talk about but everyone knows is a real and looming problem.
There is no way out of this corner without some bruises... and it's going to be some time before this market works itself out. Right now there is a simple relief for homeowners which is taking advantage of the low rate environment. With mortgage backed securities trading at near record highs, interest rates for homeowners are near record lows. That means pleasant salvation for anyone that missed the chance to refinance last year when we hit historic lows. The carnival is back in town and the rates are as good now as they have ever been, so if you can find your way through the all the red tape and qualify now's the time to have at it.
Of course I'm here to help anyone that needs it, and my interpretation of the market will continue to be made available through this blog.
Monday, August 8, 2011
The S&P Downgrade
When Friday's tape bomb hit the wire we found ourselves faced with an expected surprise. Yes, the possibility of a downgrade had been floating around for some time, but the actuality of it happening was a reality not many were prepared to face come Monday.
Well here we are, and the question playing out in everyone's mind over the weekend: "How are the markets going to react?" is being answered.
Equities markets and gold were an obvious call. The stock market was going to fall, and gold was going to go up. The long term markets (which coincide with the long term projected downgrade) are a different story. Would treasury's sell off, what about the MBS and interest rates, were we going to see a sell off and an immediate rise in rates?
As it turns out - at least the immediate result - people are flocking to treasuries and mortgage backed securities. After Friday's sell off where we lost a full point (32 ticks) in what I have deemed typical profit taking (to be expected after a run like we had), we are now up a 16 ticks, making back have the losses we incurred on Friday.
This tell us that while the downgrade is having sweeping effects on the equities and gold, the fixed markets have actually benefited and are improving. will this trend continue? Who is to say... two and a half hours into trading this news is not nearly long enough to draw any conclusions.
What does appear to be true is if you were looking to finance a home, and were concerned about your interest rate options rising substantially, doesn't look like that's going to happen.
But get it done while you can volatility is rampant, rabid, and wild right now... Fannie Mae and Freddie Mac were downgraded this morning but with no ill effect to our trading markets thankfully. Point is, nothing is a sure thing at this point in time. Perpare for the worst and hope for the best... locking now and relocking if the market improves is not a bad strategy. You'll be patting yourself on the back if the market falls out from under us, and we all know a bird in the hand...
Well here we are, and the question playing out in everyone's mind over the weekend: "How are the markets going to react?" is being answered.
Equities markets and gold were an obvious call. The stock market was going to fall, and gold was going to go up. The long term markets (which coincide with the long term projected downgrade) are a different story. Would treasury's sell off, what about the MBS and interest rates, were we going to see a sell off and an immediate rise in rates?
As it turns out - at least the immediate result - people are flocking to treasuries and mortgage backed securities. After Friday's sell off where we lost a full point (32 ticks) in what I have deemed typical profit taking (to be expected after a run like we had), we are now up a 16 ticks, making back have the losses we incurred on Friday.
This tell us that while the downgrade is having sweeping effects on the equities and gold, the fixed markets have actually benefited and are improving. will this trend continue? Who is to say... two and a half hours into trading this news is not nearly long enough to draw any conclusions.
What does appear to be true is if you were looking to finance a home, and were concerned about your interest rate options rising substantially, doesn't look like that's going to happen.
But get it done while you can volatility is rampant, rabid, and wild right now... Fannie Mae and Freddie Mac were downgraded this morning but with no ill effect to our trading markets thankfully. Point is, nothing is a sure thing at this point in time. Perpare for the worst and hope for the best... locking now and relocking if the market improves is not a bad strategy. You'll be patting yourself on the back if the market falls out from under us, and we all know a bird in the hand...
Friday, August 5, 2011
Turbulence in the Stratosphere
It has been an epic week in the Mortgage Backed Securities market bringing us new yearly highs and then some. Currently we are skirting historic highs (again must remember highs mean lower yields which mean better rates for borrowers).
Even so, we've finally hit some turbulence, after going up 27 ticks yesterday our market has teetered, and we are currently down 20 on the day. Here's a graph to illustrate just how far we've come and the retraction we are currently facing.
As you can see, although we don't like to see sell offs, at this point in time a sell off and some profit taking is to be expected. I do not expect our market to recover the losses we have incurred today, but the weather can't always bring sunny days... rain is necessary... so too is a little profit taking.
Next week will be telling and something to keep a close eye on. Currently the 10 year treasury yield is an important benchmark we must pay close attention to. With it's yield below 2.5% (2.4853) we have some support at these high price points int he MBS. We need this yield to stay below 2.5. Should it move down, it will only help our market, but I do expect us to find a range in the very near future which means when we do, reduced yields in treasuries will only continue to support our range, inside of it we'll see investors buying in and some selling off taking profits. For this reason I anticipate we will see these low rates moving into the future for better or worse. To break out of this range (which we are expecting but not in yet), I believe we would need the 10 year yield to drop below 2.25%...
Think that's crazy? So is 2.5% but here we stand. It could happen, would I hold out for this revelation? Not at all... take while the taking is good. There is too much risk associated with sitting on the fence at this point in time.
Let's not forget about inflation... it's looming and our arch nemesis. If these current rates will put you in a better position. Secure them while they are available and don't look back.
Even so, we've finally hit some turbulence, after going up 27 ticks yesterday our market has teetered, and we are currently down 20 on the day. Here's a graph to illustrate just how far we've come and the retraction we are currently facing.
As you can see, although we don't like to see sell offs, at this point in time a sell off and some profit taking is to be expected. I do not expect our market to recover the losses we have incurred today, but the weather can't always bring sunny days... rain is necessary... so too is a little profit taking.Next week will be telling and something to keep a close eye on. Currently the 10 year treasury yield is an important benchmark we must pay close attention to. With it's yield below 2.5% (2.4853) we have some support at these high price points int he MBS. We need this yield to stay below 2.5. Should it move down, it will only help our market, but I do expect us to find a range in the very near future which means when we do, reduced yields in treasuries will only continue to support our range, inside of it we'll see investors buying in and some selling off taking profits. For this reason I anticipate we will see these low rates moving into the future for better or worse. To break out of this range (which we are expecting but not in yet), I believe we would need the 10 year yield to drop below 2.25%...
Think that's crazy? So is 2.5% but here we stand. It could happen, would I hold out for this revelation? Not at all... take while the taking is good. There is too much risk associated with sitting on the fence at this point in time.
Let's not forget about inflation... it's looming and our arch nemesis. If these current rates will put you in a better position. Secure them while they are available and don't look back.
Monday, August 1, 2011
New Yearly Highs, Mean Rates Reach Yearly Lows
Bottom Line: This morning we broke through the yearly highs of the Mortgage Backed Securities market and are now enjoying the peak of the mountain. Difficult to say which way we go from here so we're simply going to enjoy a graph.
Isn't it beautiful? A completely subjective question. If you are in a position to lock and take advantage, than yes it is beautiful, if you're positioning yourself to take advantage it's awesome, but a little scary... a long way to fall should we slip.
One thing is certain, investors are not all that confident in our economy right now which is why we've seen such a flight to safety.
Isn't it beautiful? A completely subjective question. If you are in a position to lock and take advantage, than yes it is beautiful, if you're positioning yourself to take advantage it's awesome, but a little scary... a long way to fall should we slip.
One thing is certain, investors are not all that confident in our economy right now which is why we've seen such a flight to safety.
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