Between Monday to Thursday, Wall Street focused on the upcoming jobs reports and mortgage markets gained while traders jockeyed for position. Mortgage rates drifted lower through Thursday afternoon. But, then, after a better-than-expected Non-Farm Payrolls report Friday morning, mortgage markets — and mortgage rates — reversed.

Overall, mortgage rates dropped last week, but only by a small margin. Rates were best Thursday afternoon.

It was the second consecutive week in which mortgage rates fell.

Last week was also interesting in that both stock markets and bond markets improved, proving that rates don’t always rise when stock prices do. 455 of the S&P 500 companies posted gains last week.

If you’re shopping for a home or a refinance, though, don’t rest on your laurels. After Friday’s big sell-off, this week opens into a major headwind and, plus, the Federal Reserve’s support for mortgage markets ends in just 3 weeks.

This week, without much data to influence traders, the upward momentum in rates may have little cause to temper. We’ll see the Consumer Confidence numbers on Tuesday and Retail Sales on Friday. Beyond that, there’s not much else.

After last week’s performance, conforming mortgage rates may be poised to rise rather sharply. If you’re waiting for the right time to lock your rate, it may have been this past Thursday. Consider locking your rate early this week to protect against further rate hikes.

Related posts:

1. Mortgage Rates This Week : January 11, 2010 Be ready to lock at a moment's notice this week....
2. Mortgage Rates This Week : January 19, 2010 Mortgage markets showed little conviction last week, carvingmarkets to move,...
3. What’s Ahead For Mortgage Rates Week Of February 8, 2010 Mortgage markets improved last week on domestic jobs data and...

CNBC Market Action: Breaking down the markets, with Ira Jersey, RBC Capital Markets and James Bianco, Bianco Research.

Related posts:

1. Mortgage Rate Watch May 2009 – May 2009 Mortgage Forecast (Chart) It's already May, and time for another Mortgage Rate Watch...
2. Mortgage Rates April 29, 2009 – FED Minutes (Video) The Federal Reserve adjourned from its two-day meeting this afternoon....
3. Mortgage Rates April 1, 2009 Mortgage Rates held steady today in anticipation of Thursday’s historic...

The market has twenty trading sessions before the cessation of the MBS purchase program.  Traders believe that mortgage rates should increase, most noticeably in the lower coupon, current production area. At this point, besides the Fed, traders are not seeing much buying outside of some hedge funds and money managers for current coupon product. There was some hope that with the agencies buying delinquent mortgages out of pools, demand would pick up, but so far they have seen little interest in spite of the ultra-clean current production. Possibly their reinvestment decisions are now going to coincide with the end of the fed program. Much of this community is concerned with higher yields because of this and the overall macro environment. (Crisman Report 3-4)

Related posts:

1. Where Are Mortgage Rates Going In 2010? The Fed could increase the interest paid on excess bank...
2. Mortgage Rates May 18, 2009 – Weekly Forecast Hopefully rates do not follow the trend of Monday. Mortgage...
3. FHA Streamline Refinance Program Updates Consider this a last call for FHA Streamline Refinances. Starting...

Non-Farm Payrolls is the official name of the government’s monthly jobs report and, given the fragile state of the U.S. economy, Wall Street will be watching it closely.

Mortgage rates could spike come Friday morning.

Jobs are an important part of the nation’s recovery. Among other concerns, unemployed Americans don’t spend as much money on goods and services, and are more likely to default on a mortgage. This retards economic growth and increases the potential for foreclosures.

When jobs numbers worsen, therefore, it follows that economic projections worsen, too.

Poor employment figures draw money away from the stock markets and into less-risky bond markets, including mortgage-backed bonds.  Mortgage rates improve as a result. Conversely, when jobs numbers improve, stock markets gain and bond markets worsen.

Analysts expect that a net 30,000 jobs were lost in February.

The Bureau of Labor Statistics press release hits at 8:30 A.M. ET, roughly an hour before Friday’s mortgage pricing will be available to consumers. If you’re worried about rates rising on the heels of a strong jobs report, therefore, be sure to get your rate lock in today instead. Once Friday gets here, it may be too late.

Related posts:

1. Better Then Expected Unemployment Numbers = Bad For Mortgage Rates Despite the slightly flat Unemployment Rate, the government's July Non-Farm...
2. What’s Ahead For Mortgage Rates Week Of February 8, 2010 Mortgage markets improved last week on domestic jobs data and...
3. Good News For The Unemployed Bad News For Mortgage Rates According to government data, during the last recession, job loss...

Mortgage rates are now at their lowest levels since early-February.

Last week was heavy on negative data:

• Consumer Confidence posted 16% short of expectations
• New Home Sales posted 13% short of expectations
• Initial Jobless Claims were higher than expected

In addition, both the Case-Shiller and Home Price Indices showed a slight pullback in the housing sector.

The impact of these statistics was muted, however. This is because Fed Chairman Ben Bernanke gave his semi-annual outlook to Congress and markets focused more on the chairman verbiage than hard data, looking for clues about the future of Fed policy.

Bernanke stayed on message — the Fed Funds Rate will stay low for an extended period of time.

Mortgage rates were also helped by a strengthening U.S. dollar and demand for U.S.-denominated bonds. When demand for mortgage-backed bonds is strong, mortgage rates fall.

This week, mortgage rates will jockey around Friday’s Non-Farm Payrolls report.

Jobs are playing a large role in mortgage bond trading and markets expect that 30,000 jobs were lost in February.  If the actual figure is better than 30,000 jobs lost, mortgage rates will rise. If it’s worse, rates will rise.

Other important data this week include Personal Consumption Expenditures — the Fed’s preferred inflation gauge — plus the Fed’s Beige Book release.  Mortgage rates remain in flux so float with caution.

Mortgage rates look good today, but by Friday, they could be much, much worse.

Related posts:

1. Mortgage Rates Week Of March 8, 2010 If you're waiting for the right time to lock your...
2. Mortgage Rates Week Review May 4 – 8, 2009 (Chart) The first week of May is officially over, and Mortgage...
3. Mortgage Rates This Week February 1, 2010 Usually, events like these draw money away from the bond...

On Wednesday, the Commerce Department released its Housing Starts data for January 2010. The data showed starts at a 6-month high.

A “Housing Start” is a privately-owned home on which construction has started.

Headlines on the Housing Starts story included:

• U.S. Housing Starts Hit 6-Month High (Reuters)
• U.S. Economy Receives Home Building Boost (Shepparton)
• Housing Starts Post Sharp Rebound (ABC)

Based to the headlines, the housing market looks poised for rapid growth through the Spring Market.

The real story, though, is that although Housing Starts increased by close to 3 percent last month, the growth is mostly attributed to buildings with 5 or more units.  This includes apartments and condominiums — a sector of the housing market that’s notoriously volatile.

If we isolate Housing Starts for single-family homes only, we see that starts grew by just 7,000 units last month and have failed to break a range since June 2009.  January’s tally is slightly below the 8-month average.

Perhaps more interesting than the Housing Starts, though, is the Commerce Department’s accompanying data for Housing Permits. After a 5-month plateau that ended in November, Housing Permits posted multi-year highs for the second straight month.

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

One reason permits are up is that home builders want to capitalize on the federal homebuyer tax credit’s dwindling time frame.  Sales are expected to spike in March and April and more homes will come online to deal with that demand.  Home buyers should shop carefully, but with an eye on the clock.

As the tax credit’s April 30, 2010 deadline approaches, competition for homes may be fierce.

Related posts:

1. The Housing Market Index Reaches A 16-Month High Each month, the National Association of Home Builders releases its...
2. Housing Starts Increase, This Won’t Be Good For the Economy Housing Starts soared in June, thumping analyst expectations for the...
3. Mortgage Rates April 17, 2009 – Mortgage Week In Review Mortgage Rates increased April 17, for a second day as...

But for as much as the foreclosure filing statistics can be astounding — over 300,000 homes were served last month alone — the prevalence of foreclosures depends on where you live.

As reported by RealtyTrac, just 4 states accounted for more than half of the country’s foreclosure-related activity last month.

California : 22.7 percent of all activity
Florida : 14.9 percent of all activity
Arizona : 6.7 percent of all activity
Illinois : 5.7 percent of all activity
The other 46 states (and Washington D.C.) claimed the remaining 49.9%.

However, just because foreclosures are concentrated geographically, that doesn’t make them less important to homebuyers around the country. There’s been more than 1.4 million foreclosure filings in the last 12 months and that’s a figure that can’t be ignored.

Distressed properties now play a role in one-third of all home resales.

Therefore, if you’re in the market for a foreclosed home, here’s a few things to keep in mind.

Properties are usually sold “as-is” and may not be up to living standards. Be sure to physically inspect the home before buying it.
Buying a home from a bank is rarely as streamlined as buying from an individual homeowner. Be prepared for delays and long closings.
Foreclosures aren’t always listed for sale publicly. Ask your real estate agent how to access the complete foreclosure inventory.

In order to use the federal homebuyer tax credit, you must be under contract for a home by April 30, 2010 and closed by June 30, 2010. That doesn’t leave much time to find a bank-owned home and make it to closing. If you’re serious about buying foreclosures, it’s probably best to start your search soon.

Related posts:

1. Foreclosure Activity Remains Concentrated In Just 4 States As reported by RealtyTrac.com, more than half of September's foreclosure-related...
2. Where Are The Top Foreclosure States (Graph) Once again, the country's foreclosures are concentrated in just a...
3. Foreclosures Continue To Concentrate Across Just 3 States As part of its research, RealtyTrac.com catalogues a lot of...

They are going up!!!
http://www.marketwatch.com/story/bernanke-exit-timing-to-depend-on-data-2010-02-10-120120

The Fed could increase the interest paid on excess bank reserves to sop up “extra” cash out there, which may have more of an impact than raising the overnight Fed Funds rate. Not only are investors wondering about another extension (not likely) of the MBS purchase program, but also when the Fed might decide to start selling MBS’s from their portfolio… this would pull money out of the economy and shrink the Fed’s $2.2 trillion balance sheet, helping to avoid inflation and getting the Fed out of the business of subsidizing mortgages, but also push mortgage rates higher. (Crisman Report 2-10)

Also:

“Refinances in 2010 will be down 52% and purchase mortgage volume will be down 5%
from 2009, according to the latest projections from iEmergent, a Des Moines,
Iowa-based market research firm.” (National Mortgage News)

Related articles by Zemanta

• How and When Will the Fed Reverse the Huge Addition to Bank Reserves? (seekingalpha.com)
• Freddie Mac to start buying back bad loans (sfgate.com)
• Bernanke outlines plan for pulling in stimulus aid (sfgate.com)

Related posts:

1. March 2010 Mortgage Rates Review Mortgage markets improved last week as economic reports painted a...
2. 2010 Predictions For Housing Markets And Mortgage Rates Given how varied their outlooks, it's clear that the professionals...
3. Mortgage Rates This Week : January 19, 2010 Mortgage markets showed little conviction last week, carvingmarkets to move,...

Underwriting guidelines are tightening.

The data comes from the Federal Reserve’s quarterly survey to its member banks.  The Fed asks senior bank loan officers around the country to report on “prime” residential mortgage guidelines over the most recent 3 months and whether they’ve tightened.

For the period October-December 2009:

• Roughly 1 in 4 banks said guidelines tightened
• Roughly 3 in 4 banks said guidelines were “basically unchanged”

Just 2 of 53 banks said its guidelines had loosened.

Combine the Fed’s survey with recent underwriting updates from the FHA and generally tougher standards for conventional loans and it’s clear that lenders are much more cautious about their loans than they were, say, in 2007.

Today’s home buyers and would-be refinancers face a bevy of new borrowing hurdles including:

• Higher minimum FICO scores
• Larger downpayment requirements for purchases
• Larger equity positions for refinances
• Lower debt-to-income ratios

So, if you’re on the fence about whether now is a good time to buy a home, or make that refi, consider acting sooner rather than later.  It doesn’t necessarily matter that mortgage rates are low, or that there’s an up-to-$8,000 home purchase tax credit for households that qualify.  With each passing quarter, fewer and fewer applicants are eligible to take advantage.

Related posts:

1. Underwriting Hurdles Increase Banks Raise Mortgage Qualification Standards In other words, mortgage rates may stay low into 2010,...
2. Mortgage Underwriting Outlook In its quarterly survey to member banks, the Federal Reserve...
3. How To Speed Up Mortgage Underwriting With mortgage rates are hovering near all-time lows, lots of...

Mortgage rates are now at a 6-week low but probably shouldn’t be.  It underscores just how important global events can be to U.S. mortgage markets.

For example, corporate earnings continue to improve and key elements of the economy are strengthening.  Even the Federal Reserve acknowledges this.  In most circumstances, that would be a boon for the stock markets and bond markets would suffer, including mortgage bonds.

Last week, that wasn’t the case.

Early in the week, as (1) China tightened its monetary policy, (2) Greece did little to quell lingering default fears, and (3) Spain raised its deficit forecasts, global investors sought to reduce their collective risk exposure. For safety of principal, many sold some of their more aggressive positions and moved the cash proceeds into the U.S. bond market — which includes mortgage bonds.

On Wall Street, this type of trading pattern is called a “flight-to-quality”.  Because mortgage bonds are backed by U.S. government entities, the debt is considered to be ultra-safe.  Last week’s extra demand for bonds helped to push prices up and mortgage rates down.

And that was before Friday’s weak jobs report. Although the Unemployment Rate fell to 9.7%, the government reported a net loss of 98,000 jobs last month and this, too, helped mortgage rates tick lower.

This week, we’ll hope for momentum to continue.

There’s very little domestic news to move rates this week so keep an eye on the global market for similar stories like what we saw last week.  Or, if you’re not sure what to look for, just give me a call or send me an email and I’ll be happy to watch the markets and mortgage rates for you.

Related posts:

1. What’s Ahead For Mortgage Rates This Week February 16, 2010 Mortgage markets worsened last week on general profit-taking in the...
2. Mortgage Rates This Week February 1, 2010 Usually, events like these draw money away from the bond...
3. Mortgage Rates Week Of March 8, 2010 If you're waiting for the right time to lock your...