Mortgage rates continue to hold steady while the broader market searches for new direction.  So far this morning, mortgage backed securities (MBS) are trading near the same level of yesterday's close. The price behavior of MBS, like yesterday, is being dictated by the flow of money between benchmark fixed income securities and riskier stocks. Yesterday, MBS once again traded in a tight range, closing slightly higher than the morning opening price marks.  We should continue to see par 30 year conventional rate mortgages in the 4.625% to 4.875% range.   There is a good chance that some of the more aggressive lenders will be offering par 4.50% on rate sheets today...to the most qualified consumers. 

There are a few economic data releases to discuss this morning.

The Commerce department released Durable Goods Orders this AM. Durable goods are a key indicator of FUTURE manufacturing activity.

Durable Goods are products that have a life expectancy of at least three years (cars, computers, machinery) .Most economic indicators tell us what happened in the past. Durable goods orders tells us what might happen in the future. Specifically the Durable Goods orders provides an indication of what manufacturing production will take place in upcoming months. When interpreting the orders for factory goods...a fall in orders indicates contracting production. A persistent decline in factory orders is an omen that assembly lines may soon slow to the point that less labor is needed to fulfill production demand. This can lead to laying off workers and possibly even closing down plants. A jump in orders indicates factories will remain busy as production is expanding. A overly strong reading may imply inflation though, so the MBS market prefers a lower reading. In this economic environment...market participants are overlooking possible inflationary effects of a rapidly expanding manufacturing industry.

Today's data release indicated that in March, durable goods orders declined by 0.8%, considerably less than the 1.5% decrease that economists expected. February’s data was revised lower from an increase of 5.1% to an increase of 3.9%.  After the release, there wasn’t much of a visible reaction from the markets.

The last report for the week is new home sales.   This report measures the number of newly constructed homes that have sold in the prior month.  Last month this report showed new home sales to have jumped higher by 4.7% in February to an annualized pace of 337,000, most likely in response to record low mortgage rates and falling (perhaps bottoming?) home prices.  The amount of new home sales helps investors determine economic momentum as the housing market is a forward looking indicator. Remember: when consumers buy new homes they usually spend additional money on the household goods...such as appliances, flooring, window treatments, etc…  We have another report showing home sales to be if not on the rise, at least not declining further.  What is your opinion on housing?  Have we hit bottom yet or more to fall?

This report was expected to show new home sales to have declined from last month to a pace of 330,000, but much to the surprise of market participants, the release revealed a much higher reading of 356,000.  So it appears that many people who have been waiting to buy are now getting off the sidelines.  Rates under 5% sure help with that decision!  After the release of this report the stock market moved higher and treasuries moved to their lowest prices of the day. The yield of the benchmark 10 yr treasury increase to 2.99. 

MBS prices remain stable near yesterday's closing marks. Early reports from fellow War Room mortgage professionals have shown at least one lender offering 4.5% today as par for a 30 year conventional fixed rate mortgage.  To qualify for this rate a consumer must have a FICO credit score of 740 or higher, a loan to value of 80% or less and be willing to pay all closing costs and 1 point loan origination/discount/broker fee.