In a rather volatile session, mortgage rates ended yesterday’s session unchanged as a small rally in benchmark Treasuries helped support the MBS market. Following weaker than expected economic data in the morning, rates rallied. However as profit taking took place later in the day, early session strength was lost and MBS prices returned to opening levels. Overall, even though prices moved about a relatively wide range, rates remained unchanged on the day.
The Mortgage Bankers’ Association this morning released their weekly applications index. This data tracks the weekly change in the amount of mortgage applications at major lenders. An increasing trend is positive for the economy in two ways. First, more home purchases leads to more home construction and consumer spending as the home buyer buys items to fill the new home. Second, higher amounts of refinancing should also lead to higher consumer spending as homeowners refinance to lower rates and lower payments giving them more money to spend into the economy. The report shows that purchase applications have fallen again down 4.7% following last week’s plunge of 11.7%. The refinance activity posted a modest 1.4% increase following the prior week’s 11.3% increase as homeowners rush to lock in such low mortgage interest rates.