Part of the whip lash seems to be coming from traders reading the tea leaves of the Housing Summit. Comments by Bill Gross that Pimco wouldn’t buy a mortgage security unless the government backed it or if they did, they would require a minimum of 30% down payment. Other comments range from having FNMA/FHLMC reduce all current mortgages to 4.0% as a stimulus measure for the economy. How would you like to be invested in a few billion of 4.50% or 5.0% paper and take a hair cut to 4.0%?
Probability of a worsening Austin mortgage price change is gaining. Nothing huge, just volatile. As I mention late last week, borrowers should be careful as the market continues to churn on headlines from out of the blue!
Last Tuesday the National Association of Realtors (NAR) reported the Q1 median price for existing homes was up in 91 out of 152 metro areas compared to a year ago, showing the housing market is starting to stabilize. This was a nice gain over Q4 of last year when prices were up in only about 40% of the cities tracked. Even more encouraging, the percentage price increases in 29 cities were in double-digits.
Best to take advantage of current mortgage pricing with such low odds of improvement in the cards. Currently, we’re trading 3.73% with the extremes at 4.62% and 2.0%. Lots of room to run (either way) as the economic picture changes.
Not sure how long this bid (buying frenzy) will go on but until it’s over, it will help our mortgage pricing
For the most part, it’s a quiet trading day with treasuries and mortgage backed product being supported by the massive MBS short/accelerated pay down program going on. Not sure how long this bid (buying frenzy) will go on but until it’s over, it will help our mortgage pricing.
Borrowers are best to take advantage of any price improvement by Thursday afternoon. Technically, the buying looks suspect because it is not endorsed by any daily study turning bullish. All are neutral, telling us that all we’re doing is rattling around in the range.
The market was looking for a better number, given high hopes of a better holiday season. We see the negative December reading as unsettling, reflecting a consumer that has started to spend but at a snail’s pace.
We saw strong evidence last week that homebuilders are well on their way to recovery. Housing starts for November were UP 8.9%, to an annual rate of 574,000 units. Single-family starts were 35.0% higher than their January and February lows. The very volatile multi-units starts were UP 67.3% from the previous month's cyclical low. And get this -- starts were UP in every major region across the country!
Keep one eye on stocks (now up 54 on the big board) as mortgage pricing sits on the other side of the teeter totter
Corporate earning woes continue on Wall Street today with Caterpillar [...]