After closing at new all time price highs on Monday, profit taking yesterday pushed prices lower and forced lenders to reprice for the worse,  with a few doing so multiple times as the losses continued through the close into after hours trading.

The Mortgage Bankers Associations this morning released mortgage application data. This index tracks the weekly change in the number of mortgage applications submitted at major lenders.  An increasing trend for both would be positive for the economy and stock market.  More home purchase applications should equate to more home purchases which tends to increase demand for furniture, flooring, etc., as home buyers buy items to furnish the new home.  Higher refinance activity is also positive for the economy as home owners refinance to lower rates and lower payments freeing up cash which can be spent into the economy.

For the holiday shortened week ending November 27th, the index showed purchase applications increasing 4.1% and refinance activity up 1.7%.   AQ notes that the holiday shortened week did have an effect on the data as the unadjusted index was -29.3%.  This is in line with anecdotal evidence that, regardless of record low mortgage rates, that loan production activity remains sluggish. (Not a great sign for the health of housing. READ MORE

Also out this morning was an unofficial preview of Friday's Non-farm Payrolls report...the ADP Employment report.  This data comes out on the Wednesday before the official government labor market report.  Historically speaking, the ADP report has varied greatly from the official report but it is gaining more credibility as its accuracy has been improving.  One big difference between the ADP numbers and the official government report is that ADP does not take into account government hiring, only the private sector. 

The ADP report indicated that U.S. companies cut 169,000 jobs last month, topping economists estimates of only a loss of 150,000 jobs.  This is the lowest number of jobs lost since July of 2008.   Friday’s much more important Employment Situation report is expected to show only a loss of 100,000 jobs and the unemployment rate holding steady at 10.2%.

Later today we get the release of the Beige book,  a report on domestic economic conditions. The Federal Reserve uses the Beige Book when deciding on monetary policy.  While much of the information is already known, market participants still review it because it provides a view into how the Federal Reserve views the economy. 

Reports from fellow mortgage professionals indicate lender rate sheets are worse this morning.  The par 30 year conventional rate mortgage has risen to the 4.625% to 4.875% range for well qualified consumers.  To qualify for 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 an estimated one point loan origination/discount/broker fee.  If you are seeking a 15 year term, you should expect a par rate in the 4.125% to 4.375% range with similar fees.

If you have been floating over the past month, hopefully in the past week you followed my LOCK stance and took advantage of record low mortgage rates. If you are still floating, it is not too late to lock, mortgage rates are still very aggressive. While AQ and MG say there is room for benchmark rates to move lower into year end, they both agree that lenders will be reluctant to let rates fall below 4.50%.