Here is your weekly update to get you up to speed on the mortgage market as you go into the weekend and meet with clients.  The MBS (Mortgage Backed Securities) market has still been volatile. It’s very difficult to get a grasp on where things are going but I will do my best to explain where we are.

In yet another volatile trading session, lenders were excessively unfriendly with loan pricing out the gate this morning.  However, following a strong 10-year Treasury note auction, MBS prices benefited from a modest benchmark interest rate recovery rally.  The corresponding effect on mortgage rates was widespread re-pricing for the better. Re-pricing for the better = lower rates. Re-pricing for the worse = higher rates.

Unfortunately, even after re-prices for the better, loan pricing was still worse than it was yesterday and the best execution conventional 30 year fixed mortgage rate still moved back up to 4.875%.  We say 4.875% is the best execution conventional 30 year fixed mortgage rate because the average cost to permanently buy-down your mortgage rate from 4.875% to 4.75% is outrageously high, reflecting a complete lack of liquidity for 4.0 MBS coupons in the secondary market.

Next week has only a couple of relevant economic reports scheduled and they come the latter part of the week. The stock and bond markets will be closed Monday in observance of the Martin Luther King Jr. holiday. They will not close early today, but we may see trading thin out as market participants head home for the long holiday.  Look for more details on next week’s events in next Friday’s weekly update.

Here are rates leading into this weekend:

30 year fixed – 4.625% (4.782% APR)

15 year fixed – 4.0% (4.267% APR)