Thursday Texas Real Estate and Mortgage Rate Blog

After no data this week, today weekly jobless claims were lower than expected at 315K, down 9K from last week, markets were expecting claims to be up 7K. Claims the lowest level since the end of November, a sign of further improvement in the labor market. 

Feb retail sales also stronger than forecasts; up 0.3% overall and ex autos also up 0.3%, estimates were for sales to have increased 0.2% and ex autos +0.1%; the first time in three months sales were up. The rate markets declined in price while the stock indexes continued to improve on the better data. Uncertainty will continue until we get March data next month.

 This afternoon Treasury will complete this week’s borrowing to fund the deficit with $13B of 30 yr bonds up for auction. Yesterday Treasury sold 10 yr notes that met with very strong demand and added a few more ticks higher for the 10 and mortgage prices.

The recent bill coming out of the Senate on a plan to terminate Fannie and Freddie, while still a lot of the details are unknown. This morning Cantor Fitzgerald put out a comment that is worth considering. “The primary role of Fannie Mae and Freddie Mac is to issue mortgage bonds. We seem to have forgotten that. Yes, the government-sponsored enterprises became used as tools of housing policy, but let's not confuse that with mortgage finance. But confused I think we are. The reason I bring this up is that after reviewing what little information is available on the Johnson-Crapo bill coming soon in the Senate, the most glaring omission is information of how the mortgage bond markets will operate after winding down the government-sponsored enterprises. Oh, there is down payment guidance. And there are private insurance investment standards there, as well. It earned the support of trade groups, but has investors worried. Why? What hardly gets a mention, and to me is the most glaring, is how the To-Be-Announced market will function in the absence of the two bond dealers that fill this highly liquid $10 trillion space. What's happening here is a reinforcement of the need to stop using secondary mortgage market issuers as tools for housing policy. This is likely why the Johnson-Crapo bill calls for an elimination of affordable housing goals. If this works, the multifamily asset class introduction into risk-sharing deals would increase financing for renters.
Compass Point earlier gave the Johnson-Crapo bill a less than 5% shot of becoming law. Rep. Maxine Waters applauded the bipartisan support, but also give it an even lower chance. "Without a reasonable proposal that can be supported by a broader coalition of the House, housing finance reform is going nowhere this year," Waters said in an email. It's just as well; TBA investors still need better answers.” (March 12, 2014 By. Jacob Gaffney)

Interest rates continue their very tight ranges this morning, it has been a month since there has been any sustainable direction in the bond and mortgage markets. The stock market still has influence on interest rates, with the economic outlook very uncertain because of the winter investors are hedging equity portfolios using treasures and in turn moves the MBS markets. Near term support for the bellwether 10 yr note at 2.80%, resistance at 2.70%. 

This means continue to float your interest rate if you need the time and lock your rate if you are not willing to take the risk. Continue to follow my blog for all your market updates in the real estate and mortgage world for Houston, The Woodlands, Spring and other cities throughout Texas.