It's Monday after a 5-day winning streak for the FNMA Benchmark bond. After closing the week up 81 basis points from last Monday's open (about .125% in rate AND .3 points in favor of borrowers), you might suspect that bond traders might want to take a little money off the table. The RSI started the week quite overbought and has since come down to just slightly overbought with a sell-off of 15 basis points. At 104.52, the benchmark bond is now 7 basis points below the 1st level of resistance but still well above the 1st level of support (104.25) and the 200 day moving average (around 104.15).
Economic data today was a bit mixed (surprise, surprise) with the September ISM (non-manufacturing) index coming in at 56.9 vs. expectations of 57.7. This is a miss to the down side but still a strong reading and the Employment Index (a subcomponent of the ISM non-manufacturing data) jumped from August's 56 to 58.3. This is important since the Fed is watching all employment data very closely (with the possible exception of the Labor Force Participation rate which remains at its lowest level in 38 years).
There is a smattering of data that will be released this week but the most anticipated item will probably be the Fed minutes that will be released on Thursday. This could possibly be a market mover as traders will be looking into the details to try to get an indication of when the Fed will start raising rates. That said, the vote not to do anything was 9-1 at the last meeting and if we are being honest with ourselves, the job market isn't as good as some would have us believe, inflation is well below the target rate of 2% and most data just doesn't support an increase in the near future. However, the Fed may surprise us and decide to raise rates in an attempt to get us to start believing the economy really is heating up to spur us to act like it is heating up which could help get the economy to heat up. After such a nice run-up last week, I'd probably lock in my gains. If you want to float, do so with caution and watch the market closely so that you can lock quickly if the market takes a nose dive.
TRID is in effect. The new Truth-in-lending RESPA Integrated Disclosure is in effect as of Saturday and will impact the time line of a closing until we all have a handle on how they will play out. 45 day contracts should be the norm for buyers who need a mortgage to buy their homes. I doubt closings will actually take 45 days but there are new waiting periods so it's better to be safe than sorry. One tip to help make the process a bit more efficient is for the Realtor to not only name the escrow officer and company but to actually provide their full contact information so that we can get their fees and give them ours as soon as we get the file. Another thing to look for is either the use of 45 day locks which will mean slightly higher rates / fees or if the buyer insists on a 30 day lock, they will probably have to wait until about 15 days into the loan process before that will be available. Again, this is all very fluid since it is all very new to us and the title companies, the investors we sell loans to and us are all going to work through this as best we can. I'm always available to help with mortgage questions or pre-approvals for your clients - 702-812-1214 or 801-853-8720.
On a lighter note, the University of Utah Utes are now ranked 5th in the AP poll, 7th in the Coaches' Poll and 1st in the ESPN Power Rankings. ESPN College Game Day will be at the University of Utah this week and they will be televising our game against Cal on Saturday night at 8:00 p.m. MST. What a great opportunity. Go Utes. Make it a great day and a better week.