Jeni Pfeiffer Intero presents mortgage update courtesy Tony Guaraldi: As we mentioned the last couple weeks Bonds are trading between the 100 and 200 day moving average right now and that trend continued this week as expected. CLICK HERE for the Oct 18, 2013 Mortgage Rate Sheet.
If you look at the blue line today you can see it touched exactly on this line and pulled back (see chart below). It’s amazing how the technical signals hold true so often! In the short term locking at the 200 day average seems like a good safe bet. Over the longer term we still feel rates can improve further as mortgage volume slowed down the past month or two, and with the Fed still buying at a rate of about 60 Billion per month that’s a lot of demand to sop up the lower supply.
You see it takes about a month to securitize and sell the Mortgage Bonds so September fundings are hitting the Mortgage Bond market this month. With the decreased origination volumes in September and follow through in October we’ll have lower MBS supply and still the high demand from the Fed buying. Economics 101 says lower supply and high demand equals higher prices for Mortgage Bonds. Higher bonds prices means lower interest rates. Of course we don’t expect a straight line and you always have the news can affect things.
CLICK HERE for the bond graph and complete commentary.
Now that the Government is back to work we’re seeing lenders get back to normal on verifying tax returns with the IRS. Speaking of that we missed the Jobs report for September due to the shut down and they stated today the September report will be released on October 22nd and the November report will be on November 8th. I’d expect the typical volatility around those two dates coming up.
If you need to send a message to those buyers on the fence let them know rates have climbed back more than half of the losses that started on May 1st of this year. That’s a really good rally for a short period of time (see below as a picture is worth 1,000 words as they say). Also that we expect rates to improve over the next couple months so this should continue to support the housing prices in the Bay Area!
Have a good weekend!
Tony Guaraldi VP of Mortgage Lending, Guaranteed Rate Mortgage