Treasury Auction Chart

I’ve updated the 10 Year Note chart with the Treasury Auction overlay. One thing that is consistent is that on the morning (opening 2 hours) of the 2^nd day after the end of the auction, pricing has been significantly improved, versus the end of the auction. Sometimes pricing continued to improve after this window, sometimes we got a reversal and pricing began to get worse. This would indicate, to me, that the best risk/reward strategy would be to be in a position to lock first thing Monday morning.

Current Mortgage Pricing From Hometown Lending

Date: July 31, 2009
30 Yr Fixed		5/1 ARM		7/1 ARM		FHA- 30 Yr
Rate	Price	Rate	Price	Rate	Price	Rate	Price
4.500%	1.250	3.750%	0.625	4.000%	1.125	5.375%	Par
4.625%	0.750	3.875%	0.250	4.125%	0.750
4.750%	0.125	4.000%	-0.125	4.250%	0.375
4.875%	-0.500	4.125%	-0.375	4.375%	-0.125
5.000%	-1.000	4.250%	-0.750	4.500%	-0.500
15 Yr Fixed		10/1 ARM		VA - 30 Yr		USDA RH	30 YR
Rate	Price	Rate	Price	Rate	Price	Rate	Price
4.250%	-0.250	4.000%	1.750	5.250%	FICO>640	5.25%	Par
4.375%	-0.750	4.125%	1.500	5.375%	Fico<640, Fico .620
4.500%	-1.250	4.250%	1.000	6.000%	Fico < 620
4.625%	-1.500	4.375%	0.500
4.750%	-1.750	4.500%	0.000

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Mortgage Pricing Improves After Treasury Auctions

Date: July 31, 2009

10 Yr Treasury Note Close: 3.50%

Current Mortgage Pricing From Hometown Lending

Date: July 31, 2009
30 Yr Fixed		5/1 ARM		7/1 ARM		FHA- 30 Yr
Rate	Price	Rate	Price	Rate	Price	Rate	Price
4.500%	1.250	3.750%	0.625	4.000%	1.125	5.375%	Par
4.625%	0.750	3.875%	0.250	4.125%	0.750
4.750%	0.125	4.000%	-0.125	4.250%	0.375
4.875%	-0.500	4.125%	-0.375	4.375%	-0.125
5.000%	-1.000	4.250%	-0.750	4.500%	-0.500
15 Yr Fixed		10/1 ARM		VA - 30 Yr		USDA RH	30 YR
Rate	Price	Rate	Price	Rate	Price	Rate	Price
4.250%	-0.250	4.000%	1.750	5.250%	FICO>640	5.25%	Par
4.375%	-0.750	4.125%	1.500	5.375%	Fico<640, Fico .620
4.500%	-1.250	4.250%	1.000	6.000%	Fico < 620
4.625%	-1.500	4.375%	0.500
4.750%	-1.750	4.500%	0.000

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2:32 PM Juanita Bay (Kirkland)

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Reg Z changes

The mortgage industry is buzzing about the upcoming Reg Z changes. Re-disclosure is required when APR increases 1/8% (.125%) or more on a standard fixed rate loan or 1/4% (.25%) or more on an ARM or Interest-Only loan—and there is an additional 6-day waiting period before closing can occur (assuming 3 days for mail) There is a required 7-business day wait until closing can occur once the TIL is provided Rush orders may be difficult to process due to these federal regulations Process (including appraisal) must wait for customer to accept disclosure and terms Customer must be allowed to view Truth-in-Lending (TIL) and Good Faith Estimate (GFE) before collection of application fee Impacts both first mortgage and closed-end 2nd mortgage Apply to Primary and Second home occupancy types The Regulation Z (Reg Z) changes, effective July 30, 2009, gives the consumer the opportunity to shop a loan, but as a consequence to mortgage providers, slows down the origination process and doesn't allow for last-minute closings. These revisions have, in some cases, required substantial changes to loan origination systems, procedural changes and company-wide training for sales and fulfillment personnel. The new rules will provide mortgage customers with more accurate information about loan terms and costs during earlier stages of the application process. How this could change the way we do business The spirit of the Reg Z change is to give more power to the consumer, encourage comparison-shopping, avoid excessive settlement costs and prevent loans that borrowers can't afford. The consumer now has the option to "shop" a loan for the best deal. But with that benefit, there will be some drawbacks as there may not be as many rush capabilities to get a loan closed. Due to these potential delays in closing, Hometown Lending of Kirkland will now be using a 45-day lock period as the standard for quoting pricing. How will this affect customers? Many changes made to loan terms (including fees, mortgage type, pricing, interest rate, etc.) require the borrower receive a revised Truth-in-Lending disclosure and Good Faith Estimate and give them a 3-day review period (from the date they receive the documents) to consider the changes. As a result, any changes near a scheduled closing date may require a change in the closing date.
Equal Housing Lender.

See and download the full gallery on posterous

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Mortgage Update

Here’s the latest pricing as well as an interesting story about home sales from CNBC…

Current Mortgage Pricing From Hometown Lending

30 Yr Fixed		5/1 ARM		7/1 ARM
Rate	Price	Rate	Price	Rate	Price
4.500%	2.125	3.750%	1.375	4.250%	1.125
4.625%	1.625	3.875%	1.000	4.375%	0.750
4.750%	0.875	4.000%	0.625	4.500%	0.250
4.875%	0.250	4.125%	0.250	4.625%	0.000
5.000%	-0.250	4.250%	-0.125	4.750%	-0.375
15 Yr Fixed		10/1 ARM		VA/FHA
Rate	Price	Rate	Price	Rate	Price
4.250%	0.375	4.375%	1.250	5.500	0.000
4.375%	-0.125	4.500%	0.875
4.500%	-0.625	4.625%	0.500
4.625%	-1.125	4.750%	0.000
4.750%	-1.375	4.875%	-0.375

Exclusive Data: Home Sales All About Price

Anybody pick up a newspaper this morning? Home price chatter is all the rage, thanks to a rare, positive report from the folks at S&P Case Shiller.

Now, apparently, it's time for everybody to take a side: Has housing hit bottom or hasn't it? Don't worry, I won't answer that question. Not my job.

I will answer a question that I was asking into the air yesterday, and that is, what's selling at what price point?

I absolutely detest these wildly generalized reports that say, "home prices nationwide are up or down X percent." That doesn't mean anything.

So I asked the National Association of Realtors to pull some data for me on where sales stand at specific price points. Have a look, and I think it might help you to understand better whether or not housing has "hit bottom."

Link: Mixed Picture for Home Foreclosures

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Mortgage Update

Here’s the latest pricing as well as bond market information from today.

Current Mortgage Pricing From Hometown Lending Of Kirkland

30 Yr Fixed		5/1 ARM		7/1 ARM
Rate	Price	Rate	Price	Rate	Price
4.500%	2.000	3.750%	1.000	4.250%	0.875
4.625%	1.500	3.875%	0.625	4.375%	0.500
4.750%	0.750	4.000%	0.250	4.500%	0.125
4.875%	0.000	4.125%	0.000	4.625%	-0.250
5.000%	-0.375	4.250%	-0.375	4.750%	-0.625
15 Yr Fixed		10/1 ARM
Rate	Price	Rate	Price
4.250%	0.000	4.375%	1.125
4.375%	-0.500	4.500%	0.625
4.500%	-1.000	4.625%	0.250
4.625%	-1.250	4.750%	-0.125
4.750%	-1.750	4.875%	-0.625

Rates are based on conforming loan guidelines, subject to lender approval.

Bond Expert: Wednesday Wrap

From Seeking Alpha Link

Prices of Treasury coupon securities took a wild ride today as a variety of cross currents buffeted the fixed income market.

Markets opened with a bid on equity market weakness in China and maintained its firm one following an ostensibly weak Durable Goods report.

As the day progressed, the focus of the market shifted to supply in the form of the Treasury auction of $39 billion 5 year notes. I wrote about it extensively earlier. The Reader's Digest version is that the auction result was quite sloppy and the dealer community shot the taxpayers in the big toe with a 5 basis point tail.

The yield on the 2 year note increased 5 basis points to 1.17 percent. The yield on the 3 year note climbed 6 basis points to 1.70 percent. The yield on the 5 year note climbed 5 basis points to 2.65 percent. The yield on the 7 year note is 3 basis points higher at 3.31 percent. The yield on the 10 year note declined 2 basis points to 3.66 percent. And they are as dogs in heat regarding the Long Bond, as its yield tumbled 5 basis points to 4.50 percent.

The 2 year/5 year/30 year spread is 37 basis points. That is more than 10 basis points cheaper than the close of yesterday and represents the lack of interest in the auction.

The 2 year/10 year spread is 249 basis points, which is 7 basis points narrower on the day.

The 10 year/30 year spread is narrower by 2 basis points at 84 basis points.

Expectations regarding future inflation declined today by a tad. The breakeven on 10 year TIPS is 185 basis points today versus 186 basis points yesterday.

The breakeven spread on 30 year TIPS slipped to 228 basis points from 232 basis points yesterday.

10 Year Treasury Note Chart

Earlier in the day, the Open Market Desk intervened in the free market and purchased nearly $3 billion of securities with maturities between 2019 and 2026.

Goldman Sachs (GS) (purportedly a well connected and well informed and powerful bond firm domiciled in lower Manhattan) put out a piece today in which the firm called for higher bond yields.

They suggest that relative to other asset classes, the risk premium built into the Treasury market is too high and should decline to reflect less risky conditions. Here is a relevant excerpt:

• UST yields have room to rise. Financial conditions have eased significantly over the last month.
• Risk premium on the UST curve is high relative to other asset classes. As a result, flatteners may be attractive.
• The strong participation in June’s front-end auctions is likely not the start of a new trend.

I would humbly suggest that it is possible that the Treasury market has the correct story and the other markets are wrong.

The corporate bond market remains firm and there have been no significant changes since I posted on it earlier.

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