Commentary: Mortgage interest rates are ticking fractionally higher this morning as investors remain guarded in front of this afternoon's sale of $21 billion worth of 10-year notes by the Treasury Department. Headline news out of Europe suggesting the financial crisis there could soon be contained has taken some of the "flight-to-quality" support from the mortgage market as well.
I will post the auction results as soon as possible once the event concludes at 1:00 p.m. ET. Most observers believe today's Treasury auction will have little, if any influence on the trend trajectory of mortgage interest rates.
Optimism has strengthened among global credit market participants that European leaders will move decisively to recapitalize struggling euro zone banks and will also succeed in expanding the European Financial Stability Fund. Slovakia is the only one of the 17 euro zone countries that must still approve the expansion of the EFSF - and their vote to affirm the measure is expected on either Thursday or Friday. If collective approval is sustained as expected - capital may begin to trickle out of super-low yielding but ultra safe-haven assets like U.S. government debt obligations and agency eligible mortgage-backed securities - into riskier but higher yielding investment vehicles like stocks. The more likely it becomes Europe will avoid a major financial meltdown -- the more upward pressure will come to bear on mortgage interest rates here in the States. I will keep you posted as this story unfolds.
As they do every Wednesday, the Mortgage Bankers of America have released their Mortgage Application Survey figures for the week ended October 7th. According to the MBA overall loan demand was up 1.3% for the week -- driven by a 1.1% increase in requests for purchase money mortgages and a 1.3% improvement in refinance applications.
The contract rate for 30-year fixed-rate conforming mortgages finished at 4.25%, up 7 basis-points from the prior week, down 4 basis-points from four weeks ago, and down by 16 basis-points from year-ago levels. Refinance requests accounted for eight out of every ten loan applications taken last week.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
