Commentary: The trend trajectory of mortgage interest rates is largely in a sideways holding-pattern as investors await the results of this morning's sale of $35 billion worth of 5-year notes (11:30 a.m. ET). Trading volume will likely remain low ahead of Fed Chairman Bernanke's first-ever news briefing following the conclusion of the Federal Open Market Committee meeting. It appears few doubt the Fed Chairman and his band of merry central bankers will do or say anything to cause mortgage interest rates to make a sharp move higher. That is the good news.
The bad news is that there is an old market adage that says, "The majority of market participants are always wrong at major turning points." I have no idea whether this old saying will once again prove accurate before the week is over - but I do know that now is not the time to get complacent with respect to your pipeline risk management.
Keep those "lock-in" sheets filled out and ready to go - if it starts to rain on the parade of all of those market participants expecting perpetually lower mortgage rates - the first ones to scramble for cover will avoid the financial drenching those who hesitate will likely experience.
I'll provide an update to this commentary following Fed Chairman Bernanke's news conference later this afternoon.
In economic news, Durable Goods Orders rose 2.5% in March - slightly exceeding expectations. Mortgage investors yawned.
Mortgage investors also seemed largely disinterested in news from the Mortgage Bankers of America that showed overall loan originations slipped 5.6% lower during the week ended April 22nd. Purchase money loan demand was 13.6% lower than the previous week while refinance requests were off a more modest 0.6%. The national average contract rate for 30-year fixed rate mortgages finished the week at 4.8%, down 3 basis-points from the week-ago mark, down 13 basis-points from four-weeks ago, and down 28 basis-points from the year-ago level. Six out of every ten loan applications taken last week were for refi's.
