Markets Continue To Be Impacted By Global Economic And Trade-War Concerns


Happy Monday! Markets had little movement yesterday. The 10-year Treasury yield maintained within 2 bps on Friday and closed around 2.634% versus a 2.65% close the previous day. MBS improved by 12 bps versus close on the previous day. The Dow lost 63 points.

Markets continue to be impacted by global economic and trade-war concerns. There is a key report that will be released this week with the announcement from the U.S. Commerce Departments Census Bureau that it would release Decembers retail sales report on Feb. 14. This will give some background on consumer spending during the holidays and prior to the government shutdown.

Mortgage rates continue to maintain lowest levels over the past year. This morning the 10-year Treasury yield opened a little higher at 2.66% and is currently trading around 2.65%. The 10-year is trading back to mid-January 2018 levels and continues to trend in a lower tranche with 2.70% being a pivot point. The current floor for the yield is around 2.62% to 2.60%. Additional information on the trends within MBS, 10-year yield and the yield curve can be seen within the video

The Modern Mortgage Loan Originator uses Mortgage Coach. Additional information and TCAs available within Mortgage Coach and RateWatch.

Cost of Waiting Analysis

-- Home Value annual increase 4.5% - 5% based on variety of reports including NAR, Case Shiller and MBA.

-- Mortgage rate environment flat for the next 2-4 months; .25 bps worse within 6-8 months; additional .25 bps by end of 12 months.

Borrower discount points and Seller Concession in lieu of Price Reduction

-- Over 1/3 of homes on the market have had a price decrease with average decrease of 5% based on various reports.

-- 30-year FRM relative price versus 10/1, 7/1 and 5/1 ARMs through 1 point in discount stack.

-- ARMs currently accelerate more deeply at 2% discount versus 30-year FRM

Seller Concession TCA with concession used within discount points to lower the interest rate: click here

Seller Concession TCA including ARMs with concession utilized by borrower at 2% discount: click here

Cost of Waiting TCA with 30-year FRM at three, six- and twelve-month future periods: click here

Borrower paid discount TCA 30-year FRM at PAR, 1% and 2% discount; and 10/1 ARM at 2% discount: click here

Rent versus own TCA including worsening rates and increasing rent: click here

Have a great day!