HSH Market Trends

June 26, 2009 — A big late-week rally in Treasuries helped mortgage rates to slip back by a just a whisker as they retreat closer to the center of a four-week range. The completion of a huge $104 billion debt offering by the Treasury went very well, allaying for now fears that the market won’t be able to absorb the voluminous new debt being issued.

Overall, fixed mortgage interest rates declined by a single basis point to 5.90% according to HSH’s Fixed-Rate Mortgage Indicator, which encompasses rates for true jumbo, conforming and “high-limit” conforming loans. HSH’s overall average for Hybrid 5/1 ARMs shed two basis points to finish at 5.31%, while conforming 30-year FRMs eased to 5.55% for the week.

We continue to see some signs that economic growth is bubbling beneath the surface and that the recession’s depth is lessening. As a reflection of that, the final report for the national Gross Domestic Product for the first quarter of the year was revised upward by two ticks to -5.5%, a bare improvement in a bleak quarter. Still, any upgrade is a welcome one, and with a better tenor to economic reports over the past month or two, the second quarter does seem to promise a move higher to a less negative reading.

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June 19, 2009 — As we expected, mortgage rates backed down after their strong three-week run upwards. A tempering of enthusiasm about how quickly the economy will resume a pattern of growth and no new auctions of Treasury Bonds contributed to the decline.

Overall, fixed mortgage interest rates declined by 13 basis points, according to HSH’s Fixed-Rate Mortgage Indicator, which includes rates for conforming, jumbo and expanded conforming loans. At 5.91%, rates remain quite favorable for potential homebuyers but probably not low enough to see refinancers lining up at lender offices. The overall average for 5/1 hybrid ARMs moved down by 11 basis points, landing at 5.33%. Conforming 30-year FRMs, perhaps the most important product in the market, slipped back by seventeen basis points for the week, while true 30-year FRM jumbos managed a decline of nine.

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June 12, 2009 — After rising for several weeks, the storm for mortgage rates may be abating. With an intra-day runup which saw its yield above 4% for a time, the mortgage-influential 10-year Treasury downshifted to 3.79% by late Friday, shedding more than 20 basis points (0.20%) off the week’s peak. That may not presage a huge fall in mortgage interest rates, but should be sufficient to stop and at least partially reverse the upward trend.

The strong flare in rates — attributed to a number of concerns, from inflation potential, undisciplined fiscal policy, and a moderating recession — serve as a reminder that even in this great period of government intrusion, private markets still retain considerable power.

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June 5, 2009 — Economic reports which suggest that the recession is moderating served to firm up mortgage rates this week. Although it may be hard to convince refinancers or homebuyers of it, this is actually a very good thing overall. Investor money formerly stuffed into the safe haven of Treasury bonds is beginning to filter out into other areas of the economy, and the sooner that normalization takes place, the quicker the economy will experience actual recovery.

HSH’s Fixed-Rate Mortgage Indicator (FRMI) — a measure of the overall cost of mortgage credit since it includes conforming, jumbo and “high-limit” conforming data — rose by 18 basis points (0.18%)to 5.82%, the same increase as we saw last week, and the highest it’s been in three months. The FRMI’s 5/1 hybrid counterpart rose by nine basis points to land at 5.24%.

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Popularity: 9% [?]

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May 29, 2009 — Bond and mortgage markets spasmed this week, and the corresponding sharp rise in rates over a two-day period served as a reminder that even a battered private market markets can be a dangerous animal. It wasn’t completely clear what sparked the rout, but there was speculation that a combination of unclear goals in Federal Reserve quantitative easing programs, floods of new sovereign debt and shoddy treatment of GM bondholders all led to the selloff.

Yields on the influential 10-year Treasury bond had lifted by just over a half a percentage point in a few days’ time, rising from the low- to the upper-3% range and taking conforming fixed mortgage rates along for the ride. After standing at a familiar 5.03% on Tuesday, Conforming 30-year FRMs leapt to 5.29% on Wednesday and then 5.44% on Thursday before finally settling back some on Friday to 5.30%.
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Popularity: 12% [?]

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May 22, 2009 — Summer may not officially start for several weeks yet, but mortgage rates seem to have entered the summer lull rather early this year; we’ve had another week without any considerable move in interest rates, a flattening that has been with us for about six weeks now.

With Memorial day arriving earlier than usual this year, the traditional ’spring housing season’ seems to be enjoying some marginal improvement. Would-be buyers enjoy rising affordability and plenty of opportunities to buy, but that’s offset by tighter lending requirements and weak labor markets. Still, even a simple comparison reveals that 30-year conforming interest rates remain more than a full percentage point below figures seen at the same time last year, offering considerable opportunity for those with good credit to scoop up cut-price homes or refinance at near 50-year low rates.

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Popularity: 15% [?]