Mortgage Rates Stopped After 5 Days of Movement Upward

Mortgage rates are moving slightly lower so far today.  After five straight days, the MBSs are in positive territory at 11:00AM, while the 10yr is holding steady at 2.46% after hitting above 2.5% yesterday (new ceiling?). 

We got a little better than expected housing data this morning as January Housing Starts and Building Permits hit just above the forecasted amounts.  The most important component of that report (from a housing market perspective) is that SFR rose 1.9% in January and is now up 6.2% on a YOY basis.

Initial Weekly Jobless Claims were lower than expected, and confirms that last week's reading was not a fluke. The more closely watched 4-week moving average hit another historic low - hitting the lowest reading since this data has been tracked starting in 1973. It fell to 244,250.

From the Philly Fed data, their General Business Conditions Index Survey shot up dramatically, hitting 43.3 vs est of 17.5. It’s the strongest reading since 1983.

The Fed's number 2 Vice Chair Stanley Fischer said that they are nearing its dual goals and seems to be headed for its anticipated monetary policy path, which officials’ December projections put at three increases this year. He said “I don’t want to give you numbers on two or three, but this is consistent with what we had thought should be happening around now -- that is that we would be moving closer to the 2 percent inflation rate, and that the labor market would continue to strengthen.”

The dollar slipped a little yesterday and is weaker again this morning but nothing significant; the dollar is widely expected to continue to increase.

TransUnion reported that auto loans and credit card delinquencies are on the increase. Car loans two months past due 1.44% on $1.1 trillion total car loan debt, an increase of 13.3% in 2016. Delinquencies on credit cards also rose by about the same amount over the period to 1.79%, the highest since 2011. Nothing to be concerned with now but with auto loans to low credit scores we expect the delinquency rates will increase but stay within acceptable ranges. Lending to consumers with weak credit scores has been one of the fastest growing parts of the industry. Mortgage delinquencies at 2.28% is still low compared to historical levels.

I do not expect mortgage rates to move much throughout the day, as I mentioned above. Are most likely at the top of this range we have been in – now to see if it continues and head back to the floor, which may be at 2.42%. The wild card is any news from the Trump administration.