Bay Area & East Bay Area Refinance and Purchase update

We had a pretty good start to the day based on the weak economic news that is pouring in today.  Housing starts are poor, initial claims for unemployment are once again bad, and continuing claims for unemployment benefits moved higher.  All bad for the economy which means good for MBS’s.  We’ve pared some of those early gains, however.  After opening up between .15-.30 bps to erase yesterday’s losses, the FNMA 4.0% MBS is currently 99.625, flat, the 4.5% MBS is 101.09, up a tick (1/32), and the 5.0% MBS is flat at 102.06.  With people continuing to lose jobs and fewer new houses being built (translate: fewer new appliances, furniture, window coverings, supplies, etc being bought) we’re not out of the woods for a long time to come.  Coupled with the Fed’s shopping spree in MBS-land, it’s safe to look for continued long-term trends to the upside on MBS price and towards lower mortgage rates over the next few months.

MBA says mortgage apps off 10% versus prior week.

Mortgage Bankers’ Association (MBA) reported today that weekly mortgage applications fell in the week ending January 16 by -9.8% versus the prior week, which saw applications rise +15.8%.  Fixed-rate mortgage applications fell -10.2% after rising +15.6% the prior week, while ARM applications increased +28.0% after the previous week’s +34.0% increase.

The market composite index is still up +23.1% versus last year.  The average interest rate for a 30-year fixed-rate mortgage fell from to 5.24% from 5.41%. The average loan size was $234,000, compared to the previous week’s $238,200.

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