After reaching the lowest levels in history, Texas mortgage rates have shot higher over the past two weeks. There is not a simple explanation for why this increase in Texas mortgage rates occurred, but looking at the many factors which are influencing Texas mortgage rates right now will help to understand what's going on.
According to a Bloomberg news story, PIMCO (bond fund), Blackrock (hedge fund), and the New York Federal Reserve are seeking ways to force B of A to buy back mortgage backed securities to the tune of 47 billion. Reason given; due to credit quality and the failure by Countrywide to properly service loans, they have lost value – “soured.” What else is new.
Overall, trading today has been a range-bound affair with prices above yesterday’s lows and below yesterday’s highs. Traders call this an “inside day” which is simply a neutral pattern. Expecting mortgage pricing to hold steady is a pretty good bet.
The chance for additional Treasury purchases by the Fed helped Austin mortgage rates improve early this week. Stronger than expected economic growth data trimmed the gains later in the week. The net result was that Austin mortgage rates ended the week a little lower.
A slow economic recovery and the possibility of a Fed policy change helped Austin mortgage rates move a little lower again this week. As a result of recent weak economic data, the Fed is reportedly considering the purchase of additional mortgage-backed securities (MBS) to replace maturing securities. These factors, along with limited inflation, make current economic conditions supportive of low Austin mortgage rates.
Austin Mortgage rates moved even lower during the week, as uncertainty about the pace of the economic recovery has increased investor demand for relatively safer assets such as government guaranteed mortgage-backed securities (MBS).
Not to say we will not see lower Austin mortgage rates and better pricing but for that to come to fruition, we’ll need a major catalyst. Something like a stock market rout or collapse of Greece. In English, the smart money will bet against this, at least for a corrective trade that could take the 10 year note back to 3.25%. Pricing was struck with MBS unchanged, now down 5/32’s. Trigger fingers are getting twitchy.
Worries about European banks, UK austerity measures, US Housing, and the beginning of a two day FOMC meeting are all on today’s marquee. Stress tests and downgrades on banks across the pond got the early morning trade going.
Global economic news influenced United States mortgage markets this week. While the domestic data released during the week was mixed, an improved economic outlook in many other countries was unfavorable for bond markets. As a result, Austin mortgage rates ended the week a little higher.
Just a heads up as the market is on the move. Into the close, stocks (Dow and Naz) on the big board are making a comeback, down 87 points. Naz is off 18 points, cutting its losses in half. With the Dow down nearly 300 at one time, the reversal seems to have legs. We also have 45 minutes to go so anything can happen. More importantly, the 10 year note and mortgage backed securities are starting to dip. The 10 year note has cut its gains in half on the day.
