Mortgage Bond prices rose Friday as the Stock Market had its worse day of 2012. The Dow Jones lost 89 points due in part to concerns that Greece is headed for default.
The 3.50% Mortgage Bond finished the day at $105.25, 43 basis points lower than the start of the week. Mortgage Rates remained low with the 30 year fixed rate at 4.75% -no points. Rates may bump up a bit short term, but Long term, the trend is our friend. It’s possible that new lows may be realized in the future. However, be mindful of how low interest rates are. As there is less room for the rates to move lower and much more room for them to move a lot higher.
Mortgage applications soared almost 10 percent last week as many took advantage of the lower rates.
The Mortgage Bankers Association, which measures loan application volume said loan volume jumped 7.5% on a seasonally adjusted basis from a week earlier. The refinance index grew 9.4% from the previous week and the seasonally adjusted purchase index increased a slight 0.1%. The refinance share of mortgage applications accounted for 80.5% of all loan applications, compared to 80% the previous week.
Application demand also grew as the 30-year, fixed-rate mortgage on loans with conforming loan limits fell to 4.05% from 4.09% a week earlier, the lowest rate in the survey’s history. The average rate nationally on the 30-year, FRM jumbo loan fell to an all-time record low of 4.29% from 4.33% a week earlier. The 30-year, FRM FHA loan declined to 3.89% from 3.96%, while the 15-year, FRM declined to 3.33% from 3.36% a week earlier. The average interest rate on 5/1 ARMs fell to 2.91% from 2.94%.
We’ll Get Back to You – Big Banks are Turning Away Borrower’s
Bank of America is telling some homeowners who want to refinance to wait 90 days, according to sources in a Bloomberg story. BofA began a reservation system last week, asking
people who call during high-volume times if they want to be contacted again in 60 to 90 days. The move may push borrowers to other lenders or discourage them
from taking advantage of record low interest rates.
Economic News
The Velocity of Money (M1) has plunged by over 30% since the recession in 2008. Velocity measures how fast money changes hands within the economy.
Trade Deficit Grew More than Expected, Widening to $48.8 Billion in December, Highest in 3 Years.
Initial jobless claims fell 15,000 to 358,000 for the week ending February 4. This is near the 4-year low of 355,000 set week ending January 14 2012. The 4-week average,
considered a more accurate gauge of labor trends, also fell, dropping 11,000 to 366,250. This is the lowest 4-week average since April 2008.
Trade Deficit Grew More than Expected, Widening to $48.8 Billion in December, Highest in 3 Years .
ECB Leaves Key Interest Rates Unchanged at 1.0%
