Commentary: Mortgage investors gave this morning's slightly stronger-than-expected 2.4% gain in the July Factory Orders report little more than a passing glance. Vehicle orders climbed last month by the most since January 2003, rebounding from a slump caused by supply disruptions linked to the earthquake in Japan. Stripping out the outsized gain in the transportation component of this data - so called "core" factory orders posted a very modest 0.9% gain for the month.
In a separate report the Mortgage Bankers of America said their mortgage application survey for the week ended August 26th showed overall mortgage loan demand slumped 9.6% on a week-over-week basis. Refinance requests fell by 12.2% while purchase applications edged 0.9% higher.
The contract rate for 30-year fixed rate mortgages finished the week at 4.32%, down 7 basis-points from the prior week, down 13 basis-points from the month ago mark, and down 11 basis-points from this time one-year ago. Refinance requests represented eight out of 10 loan applications taken last week.
It is a close call - but for the time being I suggest you remain in your fox holes with your helmets on and your head down until/unless the Fannie Mae 4.0% 30-year mortgage-backed security can muster strong enough upward momentum to close above a price of 103.875. As I mentioned in this space last Friday -- it will not take much in the way of an inflation spike or signs of an accelerating economic recovery to prompt an ugly change in your investors' rate sheets
FYI: The mortgage market will operate on a normal schedule on Friday, September 2nd and will be closed on Monday, September 5th for the Labor Day Holiday.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
