Wednesday, March 5, 2014 - Article by: Joe Shamie - First Choice Loan Services -
Wednesday - March 5, 2014, 12:30pm ET
Current Trend Direction: Sideways to lower, just beneath support at the 25-day Moving Average
Float/Lock Bias: Carefully floating today, read on
Current Price of FNMA 4.0% Bond: $104.59 +9bp
Despite a weak reading from the ADP report coupled with a big revision lower in the previous month, Stocks are near unchanged, while Mortgage Bonds are flat to slightly higher. This sort of unconventional market reaction to bad economic data is a result of the Fed continuing to underwrite the economic recoverythere is simply no other reason to see why Stocks hold at frothy levels on what was clearly a bad report and continued bad trend. Fridays Job Report will be interesting.
The February ADP Report revealed that private employers added 139K new workers, below the 150K expected with January revised sharply lower to 127K from 175K. Harsh winter weather continues to be the "culprit" behind the weak jobs numbers since December.
The Mortgage Bankers Association's Market Composite Index, a measure of total loan application volume, rose by 9.4% in the latest week. The refinance index increased by 10%, while the purchase index gained 9%.
One reason existing home sales are so anemic is because few homeowners can afford to sell. There are 75 million owner-occupied households; 10 million are underwater and 10 million have insufficient equity in their homes to afford a down payment on a new home. 27% of all owner-occupied homes are effectively off limits. As such, the 5 million expected home sales this year, 10% of the available stock, is good.Fed's Beige Book being released at 2:00pm ET and could offer some impact.Technically, the 4% coupon has fallen just below support at the 25-day Moving Average. If you'd like to float today and tomorrow morning go ahead, but let your clients know that they should consider locking ahead of Friday mornings Jobs Report.
Joe Shamie NMLS # 241432
First Choice Loan Services NMLS # 210764
First Choice Bank NMLS# 177877
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