Wednesday, June 1, 2011

Mortgage Rates to improve 6/1/11

Mortgage Rates to improve!

Good morning to all and happy Wednesday.

Overnight market was relatively quiet until this morning release of ADP payroll report showed the increase was a dismal 38,000 in April. That pales in comparison with the expected increase of 170,000 private payrolls (which was actually reduced down from initial expected number of 177k). Bonds jumped as did the 10Y by a staggering number after this. This morning gave us a gap up open of +22bps and treasuries are at +22/32 putting yields below 3% on the 10Y for the first time in almost a year!

Adding to this major shift is the manufacturing sector that's down with a big contributor from the high prices of oil and reduced orders and sketchy supply chain and housing still way off with no clear exit strategy in view and we have a very interesting dilemma. QE2 is still in place, and active as we speak, yet it is not bearing any fruit? Is this a recipe for QE3 and if so what is that going to look like and cost?
We are nearing the 4.0% mark for 30yr fixed rate mortgages and yet MBA posts a 35% decline in mortgage applications?

In a non interest rate topic I expect to see a SHARP sell off in equities and likely further improve rates but how much more can they lower seems to be the question?

I think we see today's trading range very high from this, maybe in the arena of 101.35-101.50 (FNMA 4.0 coupon)
I think we see the 10Y settle down now and close UNDER 3% keeping it close to this mornings levels of 2.97%

Lock Advice

If your loan is closing in 14 days or less - float until this afternoon then lock
If your closing is over 14 days - float (we have more improvement to come)

If you are looking to buy a home in Colorado, enter into investment properties, or seasoned in investment properties and looking for more call or email me.
We allow up to 10 financed properties, fix and flips and more.

David S
US Mortgages

*the above commentary is not a guarantee of performance nor a guarantee of interest rate movement. It is solely based on US and global indicators and indicates a likely direction rates will head.

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