Mortgage Rates Showing Little Movement

Mortgage rates are still showing little movement as the bond market edges into weaker territory.  There has been no strong selling or buying. Early this morning the weekly MBA mortgage applications overall applications were up 4.0% last week, but this time it was all in refinances as those sitting on the fence pulled the trigger when the rates were at their lowest since November 2016.

March FHFA home price index was up, but not like February’s data.  If you now look at the old data, yr/yr the home price index at 6.2% down from 6.4% in February.

April existing home sales were thought to be down 1.5% to 5.65 mil from 5.71 mil in March. Sales declined 2.3% to 5.57 mil (annualized). Yr/yr in March revised from +4.4% to +4.2%; yr/yr April sales +1.6% down from +5.9% in March. These headlines are not what we wanted to see. Both new and existing home sales in April weaker than thought, and this is the beginning of what was known as the Spring buying season. There was no initial reaction to the data, as both the 10yr and MBS prices were unchanged after the news.

At Noon, the Treasury will sell $34B of 5yr notes.  Yesterday’s 2yr auction met with strong demand.  At 1:00PM, the minutes from the recent FOMC meeting will be released.  This is probably why the markets are quiet so far today.  We will be looking for more background discussion on if they are on a predetermined course to hike rates and more importantly discussion on pulling back on MBS purchases.

Trump met the pope this morning. There is really nothing of market moving interest. With Trump away from Washington this week things have generally been peaceful - a nice break.

Mortgage rates will likely continue to trade in a very narrow range until the FOMC Minutes are released. If there is a lot of discussion about MBS principal reinvestment and timing, mortgage rates could move higher this afternoon.