Today's Mortgage Market Update
Despite the selloff, mortgages have continued to outperform treasuries; actually, mortgages seem to tighten no matter what happens these days.
Since Thanksgiving, mortgage rates are 40bps tighter to Treasuries, suggesting an insatiable demand for mortgage paper. We’re just now starting to see widen as an austerity deal in Greece could lead to more stability in Europe and lessen the probability of a QE3 mortgage purchase program. The Fed has been in today doing the usual buying from originators, but I’m hearing money managers and hedge funds taking profits in mortgages at these levels. The selling is pushing mortgages lower in price and higher in rate.
Currently, I see Fannie 3.5s down 5/32nds. Weekly jobless claims were better than expected this AM and we continue to see strong domestic economic news putting upward pressure on mortgage rates. News out of Europe continues to drive the direction of rates, but at the moment I believe we may be testing the lower end of the new trading range in mortgage prices.