Commentary: Different day - same story.
The most significant influence on the trend trajectory of mortgage interest rates has little to do with domestic macro-economic data. The majority of mortgage investors' attention remains focused on the turmoil in the Middle East and the nuclear power crisis in Japan. The resurgence of the European credit pinch - particularly as it relates currently to Portugal - has added to the temporary flow of capital into the relative safe-haven of dollar denominated assets like Treasury debt obligations and mortgage-backed securities presently supporting the prospects for steady to mortgage interest rates.
Mortgage investors largely shrugged off earlier news from the Commerce Department indicating the February pace of new home sales plummeted 16.7% to a new all-time record low. Part of the majority of traders' cavalier attitude can probably be attributed to the strong upward 6.0% revision to the January sales pace. And in my judgment -- another large part of traders blasé attitude toward this morning's weak new home sales number can be attributed to the simple fact this data series has a dismal accuracy record - with a margin-of-error of more than 19% plus or minus. There is no doubt that demand for new homes is weak, constrained by still-high unemployment, a slow-growing economy and the competition homebuilders face from the inexpensive, distressed existing home market. But that's really nothing new - these conditions have existed for more than a year.
As they do every Wednesday, the Mortgage Bankers of America have released their Mortgage Application Survey figures for the week ended March 18th. The data shows overall application traffic rose 2.7% -- with purchase and refinance requests each up 2.7%. The national average contract rates for a 30-year fixed-rate mortgage finished the week at 4.8%, up by 1 basis point from the prior week, down by 20 basis points on a month-over-month comparison and down by 21 basis points from the year ago mark. Housing demand still looks poised to pick up over the next few quarters as the national labor market begins to post serious gains. Mortgage demand has always been a story about personal income growth. As incomes begin to rise the demand for mortgages will also rise as surely as day follows night.
It has been my experience that in times of great uncertainly - it is best to control your risk tangibly. Play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
