Wishy Washy Mortgage Market

Just this morning I sent out the following email:

Would you believe that September saw a rise in new home sales? It was actually expected to show a decline but posted a 2.7% increase. Conversely we're seeing a drop in gas prices and I'm sure everyone is happy about that. Treasuries are bringing in strong demands for guaranteed returns as investors shy away from the stock market which is why we've recovered from the spike in mortgage rates early last week.

Many people including realtors and clients ask me what factors play a role in mortgage rates. We all see the advertisements that say, "Fed cut rates! Refinance now!" In some instances where inflation fears creep in due to extremely low overnight rates this causes mortgage rates to rise. In actuality there are a lot of factors that affect how mortgage backed securities are priced such as the trend of existing home sales. Some others include:

Stock Market

Unemployment Numbers

Consumer Confidence Index

Durable Goods Orders

Gross Domestic Production

Index of Consumer Sentiment

Inflation and/or fear of inflation

Federal Open Market Committee comments

We generally follow the 10 year treasury bond as the best indicator of what mortgage rates are doing on a daily and weekly basis. While it is by no means a "spot on" indicator it serves as a general index of the MBS market. Currently the yield is 3.67% for the 10 year treasury bond and showing strength this morning.

It didn't take long for the last sentence to change. The market has deteriorated and pricing has worsened slightly for mortgage rates. This type of change may occur two or three times in a day which is important for mortgage shoppers and realtors to keep in mind when comparison shopping. What is true one minute may change in the next. That's why it is most important to find a reliable professional who not only offers a competitive rate but tracks the market and rate trends daily.