The bond market held up remarkably well yesterday considering stocks set new 2009 highs following more "better than expected" economic data and hopeful words from Fed Chairman Ben Bernanke. After reaching 3.49% yesterday the benchmark 10 yr Treasury note managed to rally of the lows, closing just three basis points higher on the day at 3.44%. In the secondary mortgage market, prices of mortgage-backed securities fought an uphill battle all day but managed to close mostly unchanged on the day after opening deep in the red. Although a few lenders repriced for the better following price improvements, most rate sheets were unchanged on the day. 

This morning the Mortgage Bankers’ Association released their weekly applications index which tracks the weekly change in home loan applications at major lenders.  Recent housing reports have shown a increase in mortgage activity but today’s report from the MBA shows a large decrease in both purchase and refinance activity.  This is somewhat troubling as mortgage rates held at historic low levels last week; however, as  many prospective homeowners and refinancers were busy celebrating the Labor Day holiday, basic personal priorities did not favor sitting down with a mortgage professional while friends and family were enjoying time off before summer ended. READ MND STORY

The U.S. Department of Labor released Consumer Price data this morning. This report measures inflation at the consumer level.  Yesterday’s producer price index indicated a much higher than expected increase in producer prices, however in many instances, higher prices paid by producers are not passed onto the consumer.  This held true today with the CPI report coming in close to expectations at +0.4% (+0.3% expected).   The year over year core CPI, which strips out food and energy due to their volatility, posted a 1.4% increase, which is well within the Feds comfort zone for price increases.   With inflation of no concern, this will allow the Fed to maintain the current accommodative stance of keeping the Fed fund rate low for quite some time. READ MND STORY

The final report on the day comes from the Federal Reserve Board of Governors with the release of Industrial Production data.  This monthly report  shows us how much factories, mines and utilities are producing.   An increasing trend suggests that consumer spending will be increasing in order to buy the goods produced which is good for the overall economy.  The report indicates that production has increased for the second month in a row just beating economists’ expectations and adding fuel to the fire that the recession is over. READ MND STORY

MBS prices were lower in the first half of the trading session. It has been a choppy morning but prices are starting to make a comeback now which would allow lenders to offer better pricing later today.

Reports from fellow mortgage professionals are indicating that the par 30 year conventional rate mortgage remains in the 4.875% to 5.125% range for the best qualified consumers.  In order to secure a par interest rate you must have a FICO credit score of 740 or higher, a loan to value at 80% and pay all closing costs including one point loan origination/discount/broker fee.   If you are seeking to access any equity in your home, you should expect to pay higher closing costs or an increase to your mortgage rate.  

A major issue that I have run into with client looking to secure a conventional(not a FHA or VA loan) loan is disputes on credit reports.  Many consumers file a dispute with the credit agencies when they feel that the information being reported is inaccurate.   In the past this did not create a problem as all that would be required would be a letter of explanation regarding the dispute.  Today, lenders will no longer accept a letter of explanation, they are requiring that the dispute be removed.  Removing disputes does take some time, so if you are considering buying or refinancing in the near future, make sure you review your credit report in detail.  If any line item says account in dispute, contact the credit agencies and have them remove the dispute.    One current client has two disputes on items that have been paid off for over 2 years showing a $0 balance with $0 payment, yet the lender is still requiring that the consumer have the disputes removed.   

Have you run into this situation?