The 10yr is opening down today @ 1.74% but that is after it was up yesterday. With no tangible economic news until Friday this back and forth does not surprise me. Like I said yesterday I believe we are in a holding pattern until the election with a bias towards slightly lower US bond yields. So with that said we should have a lot of these seesaw days where we are up a little or down a little.
Where we as originators have interest in is how mortgages react to these relatively minor swings. Unfortunately the mortgage situation is totally unpredictable. Yes we all know that the Fed is buying until Spring Break 2013 or 2014 or 2015 and so on (that is a little tongue and cheek) but the question is what are the other players doing. Are originators producing enough to at least offset the Fed’s buying? Are hedge funds unwinding their extremely profitable trades by selling? Also what are servicers doing? All these questions are answered every day and the answer seems to change day to day. This makes mortgages almost impossible to figure out if they will widen or tighten vs. Treasuries. Flip a coin.
We can shed some light on one of these components which is mortgage banker supply. Today we got the release of the MBA Weekly Applications Survey. The report showed a decline of 1.4% in mortgage applications. That is the bad news. The good news is that this expectation of less supply is helping the bid for mortgages as of this morning. So here are the highlights of this week’s report:
- Mortgage applications decreased 1.4%
- The Refinance Index decreased 2.0%
- The Purchase Index increased 3.0% to its highest level since June
- The refinance share remained unchanged @ 83%
- The Gov’t purchase share remained unchanged @ 35.5%
- The ARM share decreased to an anemic 3.9%
- The average 30yr conforming rate was 3.56% w/.39pts. This is the 1st increase after declining for the last 6 consecutive weeks.
- The average 30yr FHA rate was 3.34% w/.71pts. This is a big increase in the points charged from last months .36pts.
- The average 15yr was 2.88% w/.40pts.
- The average 5/1 ARM was 2.60% w/.36pts.