Mortgage Rates



Interest rate markets started unchanged this morning. At 8:30 the NY Empire State manufacturing index, expected at 15 frm 13.5 in Jan, jumped to 19.5; however the components were not that strong. The new orders index at 9.7 frm 12.1, employment at 11.8 frm 13.7 and prices pd at 25.9 frm 26.4. Stock market key indexes were stronger at 8:30 than at 9:00 with the DJIA +40. At 9:00 ahead of two more data points the 10 yr unchanged as were mortgage prices.

At 9:15 Jan industrial production was unchanged against forecasts of an increase of 0.6%; Dec production however was revised from +0.4% to +1.0%. Jan capacity utilization at 78.5%, about In line with estimates but Dec was revised from 78.1% to 78.6%. Reaction was mute, no change in the bond market or in the stock indexes prior to the 9:30 open.

At 9:30 the DJIA opened +16, the 10 yr unchanged and MBS prices on 30s -2/32 (.06 bp).

At 10:00 Feb NAHB housing market index was expected at 26 from 25 in Jan, increased to 29; single family sales at 30 frm 25 in Jan, six month out sales index at 34 frm 29 in Jan. A better report but no reaction to it in financial markets.

The markets quiet this morning and likely will stay that way until at least 2:00 when the minutes from 1/25 FOMC meeting will be released. How much, if any, talk took place about the possibility of another easing move from the Fed; and the discussions on how long to keep rates low. The Fed’s outlook for the economic recovery isn’t as optimistic as in the private sector.

Greece was dealt another blow in its efforts to get financial aid to avoid default next month. Euro area finance officials are investigating delaying parts or all of the second bailout while still avoiding a disorderly default, Reuters reported, citing several European Union sources. A decision slated for tonight on aid totaling 130 billion euros ($171 billion) was postponed until Feb. 20 at the earliest. Greek Finance Minister Evangelos Venizelos said Europe’s wealthier countries are “playing with fire” by toying with the idea of expelling it from the 17-nation euro area as talks over a second aid program ran into new obstacles. Europe’s finance ministers canceled a Brussels meeting slated for today on concern about the lack of assurances from Greek leaders to stick to spending cuts. They will hold a teleconference instead. Meanwhile China said it will get more involved in Europe’s bailout effort. China, which holds the world’s largest currency reserves, can provide help through avenues including the central bank and its sovereign wealth fund, said a People’s Bank of China governor. In the past China has said it would help, but not likely unless Greece gets its bailout funds that continue to allude it.

Mortgage applications decreased 1.0% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 10, 2012. The Refinance Index increased 0.8% from the previous week to its highest level since August 8, 2011. The seasonally adjusted Purchase Index decreased 8.4% from one week earlier. The refinance share of mortgage activity increased to 81.1% of total applications from 80.5% the previous week. This is the highest refinance share since January 20, 2012. The adjustable-rate mortgage (ARM) share of activity decreased to 5.4% from 6.0% of total applications from the previous week. The average loan size in the United States in January 2012 was $226,000. Average loan size has been increasing in recent months, up from $225,000 in December 2011 and up from $207,000 in January 2011. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 4.08% from 4.05%, with points increasing to 0.51 from 0.44 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.30% from 4.29%, with points increasing to 0.44 from 0.43 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.87% from 3.89%, with points remaining unchanged at 0.78 (including the origination fee) for 80% loans. The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 3.33%, with points increasing to 0.40 from 0.37 (including the origination fee) for 80% loans. The average contract interest rate for 5/1 ARMs increased to 2.93% from 2.91%, with points increasing to 0.42 from 0.40 (including the origination fee) for 80% loans.