8/24/16 Jackson Hole

August 24th, 2016

What Is Going On With Interest Rates?  #wigowir

When the price of Mortgage Backed Securities (MBS) on the Chart above goes down rates go up, and when the price goes up rates come down. Chart was posted at: 11:13 am.  All times are Eastern Standard.

Commentary

At the Close Not much action again today in the Mortgage Bond market as the Fannie Mae 3% 30-yr coupon hovered near resistance closing at 103.72 near unchanged. Weaker-than-expected Existing Home Sales and a solid 5-yr Note auction couldn't spur on any meaningful buying. Stocks ended lower as healthcare and material related shares declined with eyes on Janet Yellen's speech on Friday. The Dow lost 65.82 points to 18,481.48, the S&P 500 fell 11.46 points to 2,175.44, while the Nasdaq declined by 42.38 points to end the quiet session at 5,217.69. WTI oil slipped lower by $1.33 to $46.77/barrel. The 10-yr T Note yield 1.56%. Weekly Initial Jobless Claims and Durable Orders will be released tomorrow morning. The Treasury will sell $28B 7-yr Notes.

11:11 am Traders around the world have their eyes on Jackson Hole where Janet Yellen, the Fed Chairman is speaking Friday at 10 am.  Many times before a major speech traders will not take a position, so we are likely to MBS remain flat.  If speech indicates that the Fed is looking to raise rates, then funds will likely move out of stocks and into bonds. This would be considered a Hawkish tone.  If the Fed indicates that rates should stay the same, then funds could move out of bonds and into stocks.  This would be considered a Dovish tone.  So raising rates could help lower rates, at least in the short term. Who would have thought that?

The 3% MBS is down 12 ticks from Tuesday’s close at 103.62  just above the 50 day moving average (Black line) of  $103.60, and below  the 25 day moving average (Green Line) of $103.68.  The Rate below are unchanged from yesterday.  

Feel free to call (205-266-5669) or email (jmarbury@nationalbankofcommerce.com) John for a quote based on the terms of you loan.

11:09 AM ET New Rates have been posted

30-Year Fixed 3.375% (3.457% APR) No Origination Fee  

15-Year Fixed 2.750%   (2.892% APR) No Origination Fee

7-1 ARM 30 year 3.000% (3.341% APR) No Origination Fee

For more rates and details click: http://www.johnmarbury.com/page5.html/

  • 30-Year Fixed-Rate Mortgage: The monthly payment on a $200,000 30-year Fixed-Rate Loan at 3.375% and 70% loan-to-value (LTV) is $884.19 with 0 points due at closing. The Annual Percentage Rate (APR) is 3.457%. Payment does not include taxes and insurance premiums. The actual payment amount will be greater. Some state and county maximum loan amount restrictions may apply.
  •  15-Year Fixed-Rate Mortgage: The monthly payment on a $200,000 15-year Fixed-Rate Loan at 2.750% and 70% loan-to-value (LTV) is $1357.24 with 0 points due at closing. The Annual Percentage Rate (APR) is 2.892%. Payment does not include taxes and insurance premiums. The actual payment amount will be greater. Some state and county maximum loan amount restrictions may apply.
  • 7-1 30 year ARM for $200,000 with an Initial Interest Rate of 3.000% (3.334% APR) your monthly payments for years 1 – 7 would be $870.41 and for years 8 -30 monthly payments would be $886.87 (based on the current Index  of  1.210% Plus Margin of 2.25% to $417,000 and 2.5% to $900,000).  Monthly payments do not include taxes and insurance and the actual payment obligation will be greater.  Your variable interest rate is subject to a floor of your Initial Interest Rate.  Your variable interest rate can increase or decrease after the seventh year by 2 percentage points annually and can increase 4 percentage points over your Initial Interest Rate over the term of your loan.  The index for this loan program is the average of the interbank Offered Rates for One Year Denominated Deposits in the London Market (LIBOR)

Below is the news when it happened and the market’s reaction.  All Times are Eastern Standard Time. 

3:39 PM - A solid 5-yr Note auction and worse-than-expected Existing Home Sales failed to spark meaningful buying interest in Treasuries and Mortgage Backed Securities today. Stocks drifting lower into negative territory headed into the close.

1:10 PM - The $34B 5-yr Note garners a "B+" rating.

12:41 PM - Bond players await the results from today's $34B 5-yr Note auction.

12:38 PM - Nearing midday, MBS trade near unchanged levels, Stocks modestly lower. 10-yr T Note 1.54%. WTI oil $46.71/barrel, -$1.38.

10:47 AM - MBS continue to trade in an extremely tight range ahead of Fed Chair Yellen's speech on Friday morning. Stocks push into negative territory.

10:01 AM - The FHFA reports that home prices rose 0.2% from May to June, +5.6% from the 2nd quarter of 2015 to the 2nd quarter of 2016.

10:01 AM - July Existing Home Sales -3.2% from June to July to an annual rate of 5.39 million units, below the 5.54 million expected.

9:38 AM - The S&P 500 trades near unchanged soon after the open on Wall Street.

8:44 AM - The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 3.62% from 3.60%, with points increasing to 0.35 from 0.28 (including the origination fee).

8:42 AM - The MBA reports the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.67% from 3.64%, with points increasing to 0.34 from 0.31 (including the origination fee).

8:40 AM - The benchmark 3% Fannie Mae 30-yr coupon edges just above resistance at the 25-day Moving Average (103.69).

 8:23 AM - July Existing Home Sales will be released at 10:00 a.m.

The Treasury will sell $34B 5-yr Notes today, results at 1:00 p.m. ET.

The MBAs refinance index fell 3%, while the purchase index was up 0.3%.

The MBA reports that its Market Composite Index, a measure of total mortgage application volume fell 2.1% in the week ended August 19.

U.S. dollar index 94.69, +0.21.

WTI oil $47.11/barrel, -$1.00.

MBS open near unchanged.

S&P futures slightly higher.

The markets await Fed Chair Yellen's speech on Friday at the Fed hosted economic symposium in Jackson Hole, Wyoming.

MBS look to open near unchanged as the oil prices slip while the dollar rallies.

Contact

John Marbury
jmarbury@nationalbankofcommerce.com
Mortgage Lender NMLS# 514390
NMLS# 740833
Phone:205-266-5669
Fax: 866-217-4174

813 Shades Creek Parkway
Birmingham, Alabama 35209
 

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