Mortgage rates put a stop to a distressing losing streak yesterday as benchmark Treasury yields finally fell and prices of mortgage backed securities managed to rally. Mortgage rates opened the day better and were able to retain their early session improvements after the Treasury Department saw strong demand for a $40 billion 3 year note auction. After that, the release of the FOMC Minutes at 2pm presented no surprises to market participants and the day ended with MBS price gains intact. While there were a few lenders repriced for the better, the

The economic calendar did not offer much in the form of "market moving" data today, there were a few other events that sparked some interest though. 

The Mortgage Bankers Association released their Weekly Mortgage Applications Index at 7am.  The MBA survey covers over 50 percent of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts.  The data gives economists a look into consumer demand for mortgage loans.  A rising trend of mortgage applications indicates an increase in home buying interest, a positive for the housing industry and economy as a whole.

Recent reports from the MBA have shown  purchase demand picking up as warm weather and the soon to expire tax credit have inspired prospective homebuyers to get serious about purchasing a home. We expect this group of borrowers to be our main source of business in the months to come. On the other hand, refinance demand has been slowly fading as man home owners have already taken advantage of  mortgage rates below 5.00%.  Today’s release extended this trend. Purchase application activity rose a modest  0.2% while refinance applications declined 16.9%. For more on this report including a discussion about the competitiveness of the mortgage industry, READ THE MND STORY

If you are looking to take advantage of the Home Buyer Tax credit you better hurry.  You must be under contract by the end of this month. After you have signed a contract you have until the end of June to close on the purchase. At this point in time an extension of the homebuyer tax credit seems very unlikely, so get out there and find your new home before it's too late!

At 1pm eastern, the Department of Treasury released the results of this week's second Treasury auction, this time it was $21billion 10 year notes. Demand was fantastic! This is refreshing considering how poorly the Treasury auctions went two weeks ago. After the auction results were released, benchmark Treasury yields and MBS prices both rallied to their best levels of the week! THIS ALLOWED THE MAJORITY OF LENDERS TO REPRICE FOR THE BETTER! Check out the charts on the MBS Commentary Blog.

Reports from fellow mortgage professionals indicate lender rate sheets to be improved from yesterday lowering consumer borrowing costs.  The par 30 year conventional mortgage rate mortgage is now in the  4.875% to 5.25% range for well qualified consumers.  There are  however only a few lenders offering par mortgage rates at 4.875%.   To secure a par rate on a conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including one point loan origination/discount/broker fee.  You  may elect to pay less in costs but you will have to accept a higher interest rate which is a great option for home owners not planning on keeping current home for more than 3 years. 

I continue to favor floating.  One day at a time...

If you missed it yesterday. AQ discussed why the end of the Fed's MBS Purchase Program has yet to have a big impact on mortgage rates. READ MORE