Weekly Market Commentary – 10-29-2011

Oct 29, 2011 by FHH

Different day – same story.

The trend trajectory of mortgage interest rates continues to be heavily influenced by the ebb and flow of news surrounding today’s summit meeting in Brussels, Belgium of all 17 euro-zone leaders. A meeting of all 27 EU leaders began at 11:00 am ET and will be followed at 1:30 p.m. ET by a meeting of the euro-zone heads of state. I’ll keep you posted as details on the outcome of these meetings become available.
Failure to reach a deal today to insure the next sovereign debt default averting payment to Greece (due by the end of the month) will further undermine market confidence in the currency bloc and its collective ability to solve a two-year-long debt crisis. Should such an event occur – look for mortgage interest rates to move sideways to fractionally lower from current levels as capital flows out of Europe and into the relatively safe-haven of dollar denominated assets like Treasury debt obligations and mortgage-backed securities.
The probabilities are also high further delays in making meaningful progress with respect to avoiding a multi-country financial disaster in Europe will take a toll on stock market investors here at home – resulting in a sell-off in both the DOW and the NASDAQ. If such an event were to occur, the “flight-to-quality” buying spree generated by capital fleeing the selling pressure in our domestic equity markets will also serve to support the prospects of steady to perhaps fractionally lower mortgage interest rates.
Uncle Sam will be in the credit market this afternoon looking to sell $35 billion worth of 5-year notes at an auction scheduled to conclude at 1:00 p.m. ET. The result of this auction will be highly dependent on what, if any, progress is made at today’s EU summit.
The government reported slightly better-than-expected September durable goods orders and new home sales data earlier this morning but the figures were completely trumped by the looming conclusion of today’s euro-zone summit meeting.
As they do every Wednesday, the Mortgage Bankers of America have released their Mortgage Application Survey figures for the week ended October 21st. Overall application demand was up 4.9% from the previous week with purchase money request improving by 6.4% while refinance applications posting a gain of 4.4%.
The contract rate for 30-year fixed-rate conforming mortgages finished the week at 4.33%, unchanged from the prior week and up 9 basis-points from the month-ago mark.

MORTGAGE RATE UPDATE

30 YEAR FIXED: 3.99%
15 YEAR FIXED: 3.375%
5/1 ARM: 2.875%
FHA 30 YEAR FIXED: 3.99%
FHA 5/1 ARM: 3.25%
JUMBO 30 YEAR FIXED: 4.625%
JUMBO 5/1 ARM: 3.25%
*BANK FEES WAIVED FOR LIFETIME FITNESS MEMBERS*

Peter DeVico
Mortgage Consultant
MetLife Home Loans
Cell: 908-337-7799
Office: 973-355-5005
E-Fax: 410-308-6929
pdevico@metlife.com
www.devicoloans.com
NMLS ID# 93850