| Mortgage Time - Week ending September 11, 2009 |
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Strong Demand for Treasury Auctions In a light week for economic data, the Treasury auctions had the greatest influence on mortgage markets. Strong auction results, particularly for the 30-yr Treasuries, helped mortgage rates move lower during the week. In recent months, mortgage rates have been heavily influenced by concerns about the enormous amount of debt the government needs to issue to fund the budget deficit. While recent Treasury auctions have seen stronger than average demand, investors remained cautious ahead of this week's large supply of government debt. The risk is that investors will require higher yields to continue purchasing an expanding supply of bonds. Longer-term Treasuries are comparable investments to mortgage-backed securities (MBS), which largely determine mortgage rates, so the results from 10-yr and 30-yr auctions are particularly important. Strong demand from both domestic and foreign investors at this week's Treasury auctions eased the concerns. The data from the housing sector remained encouraging this week. The Mortgage Bankers Association (MBA) weekly purchase activity index rose by 10% to the highest level since early January. Combined with last week's strong reading in the Pending Home Sales index, which showed its sixth straight monthly increase, the MBA data supports an improving outlook for new and existing home sales.
Average 30 yr fixed rate: Week Ahead Mortgage Time courtesy of MBSQuoteline.com |
