Mortgage Update

The Treasury Department auctioned off $109 Billion of 2, 5 and 7-year notes this week. This is typically not good news for mortgage bonds (read mortgage rates), but investors were in a healthy buying mood to soak up this excess supply. Consequently mortgage bonds have been trading in a narrow price range all week with little volatility which has kept rates fairly stable.

With the Dow closing up for the 8th day in a row yesterday (something that hasn't happened since April 2007) there's a good chance we'll see a sell-off in stocks next week as investors recoup some profits. Some of those profits will wind up being invested into the bond market and, with no Treasury Auctions slated for next week, mortgage bonds could be the beneficiary which will help rates improve.

You might want to consider calling your clients that a) have an active purchase contract pending, but are still floating their rate or b) those clients that are close to signing a contract next week and suggest they keep in constant contact with their mortgage professional regarding this potential rate improvement. Timing is everything and your client won't soon forget you if you helped them pull the trigger at the right time.