The mortgage market started off yesterday's session on fire. Mortgage-backed securities prices were deep in the green and lenders issued aggressive rate sheets.  It was a great start to the day, but it didn't last. After reaching a peak in the morning, MBS gains gradually leaked out before morning appreciations were eventually erased in the early afternoon. Following the price decline, most lenders repriced for the worse, increasing consumer borrowing costs on the day, but not venturing too far from recent averages.

This morning the Mortgage Bankers Association released their weekly applications index. This data tracks the weekly change in the amount of mortgage applications submitted at major lenders,  for both purchases and refinances.    The report showed that purchase activity rose 4.0% following last week’s 4.1% increase while the refinance activity posted a healthy 11.1% gain thanks to record low mortgage rates in the previous week. READ THE MND STORY 

That is it as far as economic reports today, but we do have a potential market moving event at 1pm today.  The U.S. Department of Treasury will hold its second auction of the week,  offering $21 billion in 10 year notes.  Yesterday’s 3 year note auction was, more or less, average.   The relatively uneventful results of the auction combined with a quiet (illiquid) MBS market contributed to MBS price declines and higher mortgage rates.   To remind readers, as MBS prices move lower, lenders are forced to offer higher  borrowing costs to consumers.  The same holds true today, a lackluster auction will pressure mortgage rates higher.   Matt and AQ will cover the auction results on the MBS Commentary blog shortly after 1pm. 

Reports from fellow mortgage professionals indicate lender rate sheets to be slightly worse than yesterday. While rate sheet rebate is weaker today, the par 30 year conventional rate mortgage does remain in the 4.625% to 4.875% 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 an estimated one point loan origination/discount/broker fee.   You may elect to pay less in closing costs but you will have to accept a higher interest rate.