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MIG Market Watch, July 20th, 2020

MIG Market Watch, July 20th, 2020


MIG Market Watch, July 20th, 2020

MARKET COMMENT
Mortgage bond prices finished the week lower which put upward pressure on rates. Rates were worse Monday and Friday mornings and generally flat in between. There was some selling pressure as stocks got a boost from reports there may be a coronavirus vaccine sooner rather than later. The data did very little to move the market as the Fed maintained their dominant MBS purchasing role. Consumer prices rose 0.6% vs the expected 0.5% increase. The core, which excludes volatile food and energy, rose 0.2% vs the expected 0.1% increase. Industrial production rose 5.4% vs 4.8%. Capacity use was 68.7% vs 68.8%. Weekly jobless claims were higher than expected. Consumer sentiment was 73.2 vs 77. Mortgage interest rates finished the week worse by approximately 1/8 to 1/4 of a discount point.

LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
FHFA House Price Index Wednesday, July 22,
10:00 am, et
Up 0.4% Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates.
Existing Home Sales Wednesday, July 22,
10:00 am, et
3.9M Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
20-year Treasury Bond Auction Wednesday, July 22,
1:15 pm, et
None Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims Thursday, July 23,
8:30 am, et
1.3M Important. An indication of employment. Higher claims may result in lower rates.
10-year Treasury TIPS Auction Thursday, July 23,
1:15 pm, et
None Important. TIPS will be auctioned. Strong demand may lead to lower mortgage rates.
New Home Sales Friday, July 24,
10:00 am, et
680K Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.

AUCTIONS
US Treasury bonds do not directly dictate fixed mortgage interest rate pricing however they do have an indirect impact. Treasuries are used as a hedge for the interest rate risk associated with mortgage-backed security investing. Mortgage-backed securities have the potential for prepayment that Treasuries do not. Both Treasuries and mortgage bonds often track in the same direction, but this is not always the case. There are many times that Treasuries and mortgage bonds move inversely.

Despite the overwhelming size of the US economy, foreign investors can still influence the movement of US financial markets. When foreign economies struggle foreign investors often purchase US based investments including mortgage bonds. This demand usually causes mortgage bond prices to rise and interest rates to fall. This flight to quality buying is one of the factors that helps mortgage interest rates remain historically low. The Fed recently noted that, “Foreign economic activity contracted in the first quarter, even though most countries abroad introduced strict social-distancing measures to contain the spread of the coronavirus only toward the end of the quarter. Outside of China, indicators suggested that foreign economic activity plummeted further in the second quarter, notwithstanding some signs of improvement in May as restrictions started to ease. Inflation rates fell sharply across most foreign economies in April and May.”

The Treasury auctions this week will be important in determining the current appetite of foreign investors for dollar denominated debt securities. Demand has been generally good as of late, but auctions of different durations often vary in their results. Be alert heading into the auctions.

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Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at migonline.com Legal Information.

MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:

  • Rates are subject to change at any time.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
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An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020