Phoenix, AZ Real Estate Professional

A good day for interest rates!

Friday Phoenix mortgage interest rate update..........

I will continue to float over the weekend, but I caution not to let the locked loans pile up; keep your exposure from taking on too much risk. Like the market but not in love with it.  Interest rates have improved today.

If you were not watching the interest rate market early this morning you would think today wasn't much of a day given the employment report this morning. As is the case most of the time, the employment report sets off hip shooting that results in lots of traders getting their pocket books lightened. Today when the unemployment rate hit 10.2% the bond market exploded in a strong rally, the stock index futures rolled down hard and mortgage prices jumped. It took about 30 minutes to settle down, then by 9:30 selling took over in the bond market and the DJIA traded up as much as 75 points at 9:50. Mortgage interest rates and treasuries dropped their gains, went negative, sat weaker for 30 minutes before returning to spend the rest of the day unchanged on the 10 yr and stock market while mortgages bounced back to levels at 9:30. Who cares? Lenders that priced before 9:30, market commentators like us and traders licking wounds on their knees. Just a rehash of how volatile the employment report usually is.

Non-farm job losses in Oct were more than expected, -190K; but were offset by a cumulative increase in job losses previously reported by 91K in Sept and October. The upward revisions were the saving grace and provided the spin the rest of the day. While unemployment is increasing and likely to hit 11% in the next year, it generally is pushed aside by traders in favor of the non-farm jobs counts; that is, when it is convenient. When unemployment rates begin to decline that data will be the focus. Still putting lipstick on the sow and trying to get her to the prom; the employment situation is getting worse, not better; no matter the spinners that see non-farm jobs only falling 200K a month as "good news".

Consumers continue to cut credit; Sept declined $14.2B, mkts were expecting -$10B. The fourth consecutive month credit expansion declined. Banks are contributing by refusing to extend credit to otherwise qualified people.

President Obama signed legislation extending the $8,000 first-time homebuyer tax credit and giving additional tax breaks to certain homeowners trading up. Passed overwhelmingly by Congress, the bill would provide a $6,500 tax credit to homeowners who are buying a new primary residence beginning Dec. 1. The language mandates that to get the credit the homeowner must have owned their home for five consecutive years of the previous eight. But there are caps on the tax credits. They only apply to individual buyers who make no more than $125,000 and $250,000 for couples. There is also an anti-flipping provision: Any homeowner who collects the credit and sells within three years must return the money. The FTHB was extended to cover consumers signing a contract by April 30 and closing by June 30.

If you are a Phoenix Homebuyer and need a low interest rate loan, get started here

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What is happening to interest rates?

Start by floating interest rate locks this morning but stay alert to instant re-pricing alerts. Likely not much movement until at least 2:15 this afternoon. I monitor and track  interest rate markets every minutes.  When I locked interest rates on loans yesterday afternoon, my average client paid a .25% lower interest rate on their 30 year foxed rate loan.

Started soft this morning with the 10 yr once again testing the 3.50% level; so far it has held again. At 8:15 this morning the 10 yr -8/32 3.50%, mtg prices -5/32 and the DJIA at +51. At 9:00 the 10 -7/32, mtgs -4/32 and the DJIA +66. At 9:30 the DJIA opened +65, 10 yr note -11/32 at 3.51% and mortgages -4/32.  The markets right now are trending towards higher interest rates.

The ADP jobs report for Oct at 8:15 was weaker than what had been thought, non-farm jobs excluding government workers -203K; forecasts were a decline of 190K. Manufacturing jobs however, down 53K was less than expected and less than what has been the case over the last several months. There was little reaction in the interest rate markets to the data; treasuries and mortgages were already at key support and held.

Earlier this morning at 7:00 the weekly MBA mortgage applications; the composite Index, a measure of mortgage loan application volume, increased 8.2%. The refinance Index increased 14.5% from the previous week but the purchase Index decreased 1.8% from one week earlier. The four week moving average for the overall market Index is down 5.5%. This seems to be a reaction to lower interest rates.

The ISM services sector data at 10:00; the overall index was expected at 51.5, was weaker at 50.6 frm 50.9 in Sept. New orders were better at 55.6 frm 54.2, price index at 53.0 frm 48.8 and employment declined to 41.1 frm 44.3. No noticeable initial reaction to the data.

Now through 2:15 this afternoon the rate markets are likely to sit quietly at key support levels for the yield on the 10 yr and resistance levels for mortgage backs on the price chart you can see on the Market Insights at MBS Tracking (suggest taking a look at FNMA 4.5). Traders and investors will keep their heads until the statement is released and analyzed. The focus on how the Fed may possibly adjust the wording in the statement that would provide more wiggle room on how long the Fed will leave the FF rate at zero. Not likely there is any thought of increasing rates anytime in the next six months, but as have noted previously, markets won't sit back and wait for the Fed to act; by the time the Fed actually moves markets will have already discounted it. The point being, while no rate increases are in the offing, the path is definitely up for rates from these levels (and of course the obvious caveat; if equity markets were to implode rate markets will benefit).

At 10:10 the 10 yr note is sitting right on its support at 3.50%; mortgages are backing off their resistance as treasury rates move higher.

If you are a Phoenix Homebuyer and need a low interest rate loan, get started here

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