Sell Off this Morning...

Those of you closing inside 30 days, lock, market is literally the best it has ever been and rate sheets are awesome right now... those outside 30 days, you have a harder question to answer. Those with identified properties, but cannot close inside 30 days, you may want to consider a 45 day lock...

Our market is definitely on the precipice... a word I am sure I spelled wrong, but am using correctly. We could go either way at this point in time, although the smart money would be on slightly higher rates... then again long term rates may slide back down after ticking up.

It's a coin flip right now... check your gut, then make a decision.... whatever it happens to be, don't be mad at yourself if it doesn't pan out. Long as you have strong reasons, a decision made is better than any indecision.

Market Update...

Let me begin by apologizing for missing yesterdays post. If it is any consolation, we had a strong day of trading yesterday resulting in strong gains. Today, although we have not posted any real serious gains, up 2 ticks right now our market is showing support at the current levels it is trading.
This is probably due to the poor economic news overseas, and the downturn in our stock market, along with the 10 year treasury yield falling below 3.000% today.

This last point the treasury yield is our markets primary indicator. If we see the treasury yield rise, we will see our market suffer and interest rates rise. This may happen in the short term, however the long term market projections do look dismal supporting low rates to come.

Open House Flier

Here is out open house flier this week. Rates are very good right now and we are starting to see some resistance so get your clients in contract and locked. Look forward to handling preapprovals over the weekend for all of you. Have a productive showing.

Market Selling...

This chart may not show it (because I printed it before the sell off), but our market is currently selling of and down 5 ticks on the day. Sell offs always bring worse pricing because banks work very hard to protect their profit margin, expect worse pricing this afternoon unless we some type of recovering. Unfortunately this sell off looks like it is going to last at least throughout the day.

It is my opinion that this sell off is primarily due to the rising treasury yield. As you can see in my graph, I have identified a specific range that would pose problems for our market if treasury yields broke through... this is what is happening and why we have seen a losses today.

Follow the arrow if you want to know where our market has gone since this picture.


All things considered, rates are still excellent, and this may turn around tomorrow. Right now, my focus is on treasury yield. With strong support at 3.000% yield, we need something that draws investors to this market dropping the yield below this price point. If this happens, better rates are on the way. If we continue to trade in this range, rates will remain static; should yields rise, watch out rates will rise.

Rates are Awesome...

I know some of you must be thinking, why should I care so much about interest rates, I'm a real estate agent - I sell homes, rates are a secondary thought to what I do.... I got tell ya, those agents out there that have this mentality are missing closing opportunities.

With interest rates as low as they are all of us have a major opportunity and should be using it to attract new business. I know many buyers are a little upset that they missed the tax credit. 8000 dollars is a significant amount of money. Even so there are incentives in today's market that were not around while the tax credit was available, namely these low rates.

If you qualified for the tax credit and got into contract back in April, you interest rate for a 30 year fixed was somewhere above 4.5% unless you decided to pay up front costs to buy down your rate. Today, there may not be a tax credit, but you can secure a rate under 4.5% with no up front costs.

This is a major selling point and arguably a better incentive than the tax credit. On a 417,000 dollar loan the difference between 4.75% and 4.375% is a difference of 93 dollars a month... over 30 years, or 360 payments that equals 33, 480 dollars. But let's be honest most people do not stay or hold onto the same mortgage for the full term. The typical homeowner stays in their home for about seven years or 84 payments... that is a total savings of 7,814 dollars, virtually the same as the missed federal tax credit, which brings me to my next point... the CA State tax credit...

CA has allocated 200,000,000 dollars for tax credits for new home buyers up to 10,000 dollars paid out over the first three years you own the home. This is based on a first come first serve system. Couple this with the low rates and payments now available for home loans, and the incentives for buying a home today are better than they were when the Federal tax credit was still available.
We need to educate potential buyers of this opportunity. Everyone is so focused on what they missed they are not looking at what is still available. I look forward to assisting with any preapprovals you require and am happy to discuss these points in detail with potential clients still reluctant to step into the market. Here is a link that break down the CA tax credit.

Speaking of the market, here's a one year graph demonstrating what I have broken down above. Keep in mind high points on this graph lead to lower rates. Look at where we are right now, and it is clear rates are the best they have been.

Resistance Thwarted

Yesterday we managed to break through the 103.00 point of resistance, and have continued to support yesterdays gains with profit today. This is important if our market is going to offer these low rates moving into the future. Sustainability is the name of the game at this point in time. I am optimistic that this week will prove advantageous for our market this week. Even so, look at where we are. High points like these make for attractive selling points. We could face a sell of leading to higher rates.

If you are happy with rates right now, take the money and run, if you willing to take a little risk however, a lower rate may be only a couple days away. The decision should be up to the client, make sure they are aware of just how low these rates are and the current danger of floating.

Volatility... and Resistance

Hope everyone had a wonderful weekend. This morning, investors have wasted no time in disagreeing with on another, consequently we have seen serious volatility this morning, leading us first down, and now up. Currently even on the day, it is going to be difficult to post additional gains considering the strong resistance we face at the 103.00 price point.


For this reason, if you have clients in escrow closing soon, they need to lock their interest rates. Those moving into escrow should be mindful of where we are in the market and may want to consider a 30 day lock as opposed to their working for the more cost effective 15 or 12 day lock periods. This decision will depend on your clients tolerance to risk exposure.

Considering where our market is trading (current highs of the year, and some of the best pricing ever) I am concerned that this support will crumble under the strong resistance we now face.

Open House Flier

Here is this week's open house flier. At first glance it may appear as though rates are very similar to last week, they have in fact approved, and this improvement is reflected in the APR.

Agent's you may print this flier and use it to compliment your own marketing material.

Let's have a productive weekend out there. Any preapprovals needed this weekend, we are available.

Resistance...

As anticipated we have hit a serious point of resistance at 103.00. It will be interesting to see how our market reacts considering the fact that there seems to be clear support at the current price, that being 102.31... only one tick away from our resistance point of 103.00.

I don't expect serious movement in our market today. Perhaps a tick up or a couple ticks down. Monday will make for a much more interesting day of trading.

Moving into the weekend, the recent gains in our market will lead to excellent rates. Check back here shortly for this weeks open house flier.

A solid day of gains... and INTERESTING Headlines

Today is a day of bullet points... First off, our market improved today up 13 ticks which will lead to better pricing. This is great news considering we were in a downward trend. If these gains hold we may be able to safely say "not any more."

Expect there to be resistance in our market moving forward. It is going to be difficult for rates to move any lower to due current mortgage backed security prices. 103.00 is a strong level of resistance, one we have bounced off of before, and will probably do so again. Currently we closed at 102.31, one tick away from 103... and our market (green) flatlined. You can draw your own conclusions.

Headlines: Fannie and Freddie stock have now been removed from Wall Street and are pink stocks trading under a dollar. WOW...

Headlines: Senate Extends Housing Tax Credit... this is not entirely true, the proposed a bill to vote on an extension - very different. Moreover it would only extend the the credit for those that were in contract as of April 30th of this year, giving them an additional three months to close. Welcome relief to some frantic escrow officers I am sure... that is if it passes. The next couple of days will iron this wrinkled mess out.

Headlines: 500+ loan originators arrested by an FBI sting cracking down on mortgage fraud. This is all I know, but the point is it is real... any of you agents thinking it might be a good idea to back date a contract to take advantage of this possible tax extension think again. I for one don't plan on looking over my shoulder for men in black.

Clearly an interesting day in the market. Tomorrow will be interesting as well considering we are teetering on the our line of resistance.

Important Gains Must Hold - Housing Starts Worse than Expected

Today we are up in coupon about 7 ticks, which means better rates, however as we saw yesterday gains can quickly turn into losses should the market dictate. Today's trading will most likely take the lead of the stock market. The DOW is currently trading around 10,360... down about 45.00 dollars; the S&P is currently 1,110 down about 5 bucks. The reason I bring this to your attention. If there is support for the S&P at 1,110 and the sell of does not continue in the short term markets, we may see a return to these markets (from long term markets) which would lead to a sell off and higher rates. The story is the same for the DOW which is and currently has been hovering around 10,000.

And then of course we have the treasury market, which is showing a lower yield this morning, which is helping our market. The underlying news that appears to be guiding the markets right now is the worse than expected housing starts report from Reuters this morning.

08:30 16Jun10 RTRS-US MAY HOUSING STARTS -10.0 PCT VS APRIL +3.9 PCT (PREV +5.8 PCT)
08:30 16Jun10 RTRS-US MAY HOUSING STARTS 593,000 UNIT RATE (CONSENSUS 650,000) VS APRIL 659,000 (PREV 672,000)
08:30 16Jun10 RTRS-US MAY HOUSING PERMITS -5.9 PCT VS APRIL -10.9 PCT (PREV -10.9 PCT)
08:30 16Jun10 RTRS-US MAY PERMITS 574,000 UNIT RATE (CONSENSUS 630,000) VS APRIL 610,000 (PREV 610,000)
08:30 16Jun10 RTRS-US MAY HOUSING COMPLETIONS -7.4 PCT TO 687,000 UNIT RATE VS APRIL 742,000
08:30 16Jun10 RTRS-US MAY HOUSING STARTS DROP LARGEST SINCE MARCH 2009, RATE LOWEST SINCE DEC 2009
08:30 16Jun10 RTRS-US MAY HOUSING PERMITS RATE LOWEST SINCE MAY 2009
08:30 16Jun10 RTRS-US MAY SINGLE-FAMILY HOUSING STARTS -17.2 PCT, LARGEST DECLINE SINCE JAN 1991
08:30 16Jun10 RTRS-TABLE-U.S. May housing starts fell 10.0 pct

I will let you digest these figures and draw your own conclusion about how this effects our markets moving forward. I will say this is one of the reason the short term markets are selling off today, and why we are seeing gains.

Even so, the gains we have posted today fall in line with the projected green trend line outlined yesterday. See previous post... We really need to break out of this trend and establish a new line of support. I hope that the circled area represents such support, but it is way too early to tell, especially considering how closing this mimics the treasury yield down below.

Comments welcome.

Rates Worsen

If you worked half a day today and had access to market feeds this morning you probably left feeling pretty good about the direction our market was heading. Then, well... then it happened.

Currently down 4 ticks on the day, this unfortunate turn for the worse in our market has lead to worse pricing. Moreover it has encouraged banks to hedge on their rate sheets which leads to worse pricing than the market is actually offering.


Above is a five day snapshot of our market. I have drawn in the arrows all three representing possible trend lines, although I will be the first to admit the red line is highly unlikely. The yellow trend line is possible but less likely at this point in time. The green trend line is what our market seems to be following.

we should be preparing clients for worse pricing, and encouraging those in escrow to lock rates to protect their current market position.

All things considered proceeding with caution and keeping a close eye on rates is the winning formula this week.

Any specific questions we welcome. Leave a comment.

Housing Price Index...

This is encouraging... have a look at this HPI which suggests we are currently experiencing a recovery in real estate. I will let you draw your own conclusions... and will be posting this on a monthly basis as it is released.

Market Down... Low Trading Volume...

This morning the market is down, leading to slightly higher pricing. Currently off 5 ticks on the day, it appears as though these losses are primarily a react to a rise in treasury yields this morning. As the graph demonstrates the mortgage backed securities market is following the guidance of the ten year treasury... if we could invert the treasury graph and stick it right on top of our mortgage backed securities graph, they would be close to one and the same. Clearly this is not coincidence, in fact this is quite common.

If it's any consolation trading volume this morning is incredibly light. My gut tells me it is going to be a low volume day. Hopefully we see investors return to our market tomorrow, take a look at current pricing and begin buying. This is the type of support we could use right now for these low rates.

I anticipate lenders will hedge against the market in lieu of these losses this morning. Unless we see our market recover today, expect banks to price worse tomorrow morning.

Open House Flier...

Here is this weeks updated open house flier. Feel free to use this to compliment your other marketing material at open houses you are hosting this weekend. This flier is produced on a weekly basis and filed under the label "Open Houses." Click it to enlarge.

Hope you all find it helpful, suggestions to the flier you are welcome to post here and I will take into consideration.

Yesterdays Sell Off Not as Bad as It Seems

Yesterday was a not a good day in the mortgage backed securities market. However, all things considered it is not as bad as we may think based on these graphs. All things considered our market moving forward should rebound nicely this coming week. Let's take a look at the two day.

As you can see yesterday resulted in an 18 tick loss. You can also see an arrow with the word "roll" next to it. This points to the fact that yesterdays note rolled into the future trading note. This happens every month. Futures 99% of the time trading lower than current months due to the the unknown and higher level of risk. Consequently when roll occurs our market falls.

As a result pricing is slightly worse today, but "Don't Panic." Our market is showing signs of support which is evidenced by our being up 3 ticks currently on the day. Fridays are typically light in volume so Monday will be more exciting.

I will be publishing the open house flier shortly so stay tuned.

Morning Sell Off After Record Highs Broken

Yesterday we broke through records highs. It makes sense then that we would see a sell off where investors take a little profit. The five day graph to the left gives us a good idea of where we are and where we have come.

Although this sell off will result in reprices for the worse, you can clearly see we are within our current range of trading. In fact the retraction has brought us back under the current resistance levels. All things considered, this is business as usual.

We'll be tracking to see if this turns into something bigger, but all research currently indicates there is support for the current levels the mortgage backed securities market is trading at.

In closing let me remind everyone that tomorrow we will have a new flier published for your open houses, make sure to stop by.

Staggered Reprices

FYI... some lenders are repricing for the better this afternoon. Moving forward if the lender the client is approved with has repriced this afternoon, I expect that rate sheet to be better than tomorrow's opening... if they have not repriced... I anticipate their opening rate sheet tomorrow will contain the best pricing....

Flight to Safety... Rates IMPROVE

This morning we were down while waiting for the treasury auction results for the 10 year auction that went off earlier today. Although the results were not as strong as they could have been, they did support the current buy trend which forced treasury yields back down to current trading levels.

This market reaction sent the mortgage backed securities market into new territory squashing recent resistance levels which turned into today's afternoon trading support levels.

Up only 4 ticks on the day regardless we have broken the 103 price point on the 4.5% note coupon, and the 4.000% coupon is currently trading above 100. If we have a strong day of trading tomorrow we can expect very attractive rate sheets from virtually all lenders. With that said, lenders have yet to reprice these gains into their rate sheets and I doubt we will see better pricing this afternoon.

If you are currently floating your rate I would wait until tomorrow morning before considering locking. Open rate sheets tomorrow should offer better pricing than is available currently, but more importantly these auction results suggest these low rates are here to stay for some time.

A BIG Day for Rates

I will be posting in a couple of hours.... a BIG day for our market today with a ten year treasury auction, that we have just received results for. The markets have not had time to digest this information, as soon as it does I will be here with graphs and commentary.

A teaser... we wee down 4 ticks this morning in trading... not the end of the world or even a crisis, I don't even know if you can call this a true indicator for the day. The treasury auction is our lighthouse today.

More to come.

Moving Into Summer Rates Are At Historic Lows

The market is incredibly favorable right now. 4.25% on a 30 year conforming fixed, with and APR of 4.554%. How about 3.75%% on a 15 year fixed conforming, with an APR of 4.203%. This is a buyer opportunity if I have ever seen one.

Use this fact as an opportunity to contact clients that you have fallen out of contact with. This is a perfect reason to call. If they are in the market you don't have to be an expert on rates, just refer them to us and we'll take it from there and you can start working on finding them a home.

There are a number of buyers out there at are pissed (to not put to fine a word on it) about their having missed the tax credit. That may very well be the case, but those that we able to take advantage of the tax credit, were not able to take advantage of these historically low rates. New open house fliers will be available come Friday...

Between now and then let's hope that our market is able to breakthrough that horizontal red line. This would lead us to even lower rates.

Rates Hold... For Now

Rates are holding this morning at highs that have produced interest rates that are as low as they have ever been. Currently conforming 30 year fixed rates: 4.375% is coming at an upfront cost of .071, or 4.5% is paying rebate or nearly half a point (.463) for prime borrowers putting at least 20% down. Will these rates hold? They are holding for now, but the support for these rates is not very substantial.

A strong headline in short term markets, a surge in treasury yields (which we may see this week due to more auctions), Europe stabilizing... there is significant risk associated with our market right now, and the odds are stacked against the market posting any more gains. There is many ways the market can move against us at this point in time. We should be prepared for a sell off and higher rates at any point in time.

With that said on Friday I heard one bond analyst discussing the bond market. His statement caught me off guard and is worth sharing. He stated that the 10 year treasury yield could go as low as 2.500 to 2.000 percent. Although I do not believe this to be true the point is some analysts believe the treasury yield can move lower, and if it does there is a good chance the mortgage backed securities market will improve as well leading to even better rates. This is a gut shot play. I would wait for anything - lock if you're happy with your rate, if they move lower look to renegotiate before closing.

Rates are awesome right now... take advantage.

Weekend Open House Flier

Here it is... feel free to print this flier and use it as supplemental information for any potential clients curious about rates and getting preapproved. I will update this flier weekly to ensure all of you have current information for your open houses. If you would like to see changes made, I welcome suggestions. Comment... Moving forward you will find these fliers under the label open houses.

Rates IMPROVE! Wasn't Expecting That Awesomeness

If you read the post yesterday the call was higher rates moving forward. Man does it feel good to be wrong sometimes. A weaker than expected NFP (Non Farms Payroll) report can be sighted as our reason for the market gains today. All things considered if these gains hold through closing today, we'll be in an excellent position moving into the weekend for open houses and general prospecting.

In closing keep an eye out for an additional post a little later this afternoon which will include a picture that all can use as supplemental material for open houses. It is something I will be producing every Friday for those that are looking for current lending material to include in open houses. Below a yearly graph demonstrating we are at historic highs that lead to historic low rates. Comments welcome... Let's all make it a great Friday.

This is what we needed moving into the summer selling months.

Market Teetering

Read and comment on the post below this one! With that said... here's a look at today's market. Interest rates are getting worse right now, but they are still incredibly low. We've avoided a major sell off (thank the almighty) but must now prepare for a slow retraction similar to bleeding out from a gut shot.

At least it gives us a little time to get clients into homes before we see a big jump in rates. The jobs report tomorrow is something we're all interested in, but recognize it for what it is - a whole lot of government jobs that are unsustainable, a point investors are already discussing. Regardless it will be the guiding force in tomorrows market.

Open House Fliers...

Was thinking about it this weekend, and I am going to start publishing a flier that any agent and take and print off of this blog and use to supplement their marketing material at open houses. The fliers I will be producing will be updated weekly for the weekend open houses and will include the current interest rates for conforming and jumbo conforming interest rates.

This is your opportunity to suggest additional information that you think would be helpful for potential borrowers. Eye catchers, like graphs, specific background colors, style, etc...

All things considered I am confident this will serve as a useful tool to any agent that chooses to utilize it. Keep an eye you for it tomorrow. Moving forward I will be creating a new label titled open houses and posting all of these fliers in this area.

Rate Worsen... Inform your Clients

Interest rates are going up today... here is the graph supporting my claim. I anticipate this will result in new levels of resistance in the mortgage backed securities market moving forward. If I'm right, rates today despite their being slightly higher than yesterday will be the best rates in the weeks to come. Locking is the smart play, especially for borrowers that are buying a home that is at ceiling of what they qualify for, rates moving higher could compromise their ability to secure financing or require them to bring more money to the table.

The questions about this change in the market I am happy to address. Leave a comment, share your thoughts.

Market Consolidation Today... Better Rates May be Getting Worse

Well we are up in coupon which means better rates, but I am pessimistic that they are here to stay. As you will see in today's graph the market is currently consolidating. Consolidation typically leads to breakouts, and I am anticipating that the breakout that will follow this consolidation phase will be a sell off resulting in higher interest rates for consumers.

Now is a very smart time to lock... rate sheets are very favorable and the secondary market is suggesting this recent uptrend resulting in these lower rates is coming to an end. I do anticipate rates will remain low (for the time being), but not at the current levels.

Below you will see a snapshot representing the mortgage backed securities market along with the ten year treasury yield (yellow) which you can see is gaining ground right now. As this yield rises the mortgage backed securities tends to suffer due to sell offs. This results in higher rates. It is a very volatile market.... prepare for the worst and hope for the best... a locked rate can always be renegotiated should the market turn of the better, but a floating rate can never lock into a past rate sheet.

We are available for consultation and happy to discuss financing terms in detail.