After opening the day lower yesterday, MBS managed to rally steadily off the lows before a late day stock sell off added steam to the upward price momentum, which resulted in a few lenders repricing for the better by day's end. Several factors contributed to the late day price spike. The findings of the Fed's Beige Book painted an uncertain economic picture, then Wells Fargo was downgraded from 'hold' to 'sell' by a prominent analyst. These two events combined to knock the wind out of the stock market, which resulted in a rally in the benchmark debt and MBS market. Unfortunately the early morning weakness has forced most lenders to take back yesterday's rate sheet gains.

Much like yesterday, MBS have opened today much lower, however prices have been steadily moving higher throughout the day. 

Today is Thursday, that means Weekly Jobless Claims data was released by the Labor Department. This report totals the number of Americans that filed for first time unemployment benefits in the prior week.  Higher unemployment usually results in less consumer spending so the fixed income sector generally improves with higher than expected claims. While recent reports have shown the jobs sector improving, today’s release implies progress in the labor market is stalling. Initial Jobless Claims rose to 531,000 from a revised for the worse 520,000 last week (first reported at 514,000). The continuing claims portion of the data, which totals the number of Americans that continue to file for benefits due to lack of finding a new  job fell, by 98,000 to 5.92 million. READ THE MND STORY

The Conference Board released the Leading Indicators report which is a composite index of ten forward looking economic performance metrics.   This index has risen for five consecutive months, economists surveyed expected this trend to continue...which it did.  Leading Economic Indicators rose by 1.0%, beating estimates for a read of 0.9%.  

We also received a report on home values today.  Recent reports from Case Shiller have shown home values moving higher in most metropolitan regions across the country.   Today, the Federal Housing Finance Agency released their House Price index.  This report measures the monthly change in appraised values on repeat transactions by comparing prices or appraised values for similar houses securitized by conforming conventional mortgages.  In other words, this index does not take into account jumbo loans which are homes with loans over $417,000 with some high cost areas going up to $729,000.   The value of a consumer’s home affect much in our economy.   If home values are increasing it encourages more construction which creates jobs and leads to more consumer spending.   Additionally, consumers are more likely to spend when home values are rising and more likely to save when values are declining. 

Data for May, June and July  showed prices rising with the three month annualized rate posting a 4.5% increase. Economists surveyed prior to the release were expecting a fourth month in a row of price increases. However, the report indicated that values in August declined 0.3% and year over year are posting a 3.6% decline. 

Many economists believe that until home values bottom and start moving higher, it will be extremely difficult for our economy to sustain any growth.    What is your opinion on home values?  Do you feel there is more room for values to decline or have we bottomed?

Reports from fellow mortgage professionals indicate lender rate sheets are slightly worse today.  The conventional 30 year fixed par mortgage rate has risen to the 4.875% to 5.125% range for well qualified consumers.  To secure a par interest rate 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.  If you are seeking a 15 year term, you should expect a par rate of 4.375% to 4.625% range with similar closing costs.