1. Mortgage Rates End Month Triumphantly Lower

Mortgage rates moved forcefully lower today, bringing them well past previous 2014 lows and back in line with levels not seen since November 19th.  Overnight weakness in equities and foreign markets continues to promote strength in US bond markets, including the mortgage-backed-securities (MBS) that most directly influence mortgage rates.  This further solidifies 4.375% as the most prevalently quoted conforming 30yr fixed rate for ideal borrowers (best-execution).  For some lenders, that rate remains 4.5%, but for the most aggressive lenders 4.25% is a close contender for utterly flawless scenarios.  When adjusted for day to day changes in closing costs, rates fell an equivalent of 0.07% today.

Once the sharp move higher in mortgage rates during 2013 topped out in the first week of September, bond markets have been cycling between those highs and corrective lows roughly half a point away.  If you look at that phenomenon in terms of 10yr US Treasuries, that’s been taking place between 3.0% and 2.5% in general.  The analogous range for mortgage rates has been roughly 4.75% to 4.25%.

 

2. Seattle Beats Denver….in Housing and Energy

Denver and Seattle may be the top teams in football, but as housing markets, they are not exactly in the same league. Their populations are about the same, in the low 600,000s, but their demographics differ enough to make homes in Seattle nearly twice as pricey as those in Denver.

The median home value in Seattle comes in at $430,700, while Denver’s hovers around $253,300, according to the Zillow Home Value Index. Denver’s pricing, however, is recovering faster than Seattle’s, up 9.5 percent from a year ago versus Seattle’s 8.4 percent gain.

The differences in the two markets are based on income, as all housing always is. The median income in Seattle is $45,736, while the median income in Denver is $39,500. Denver also has more homes with kids, which brings down housing and household spending power.

 

3. Mortgage Bonds Poise for Biggest Gains Since 2008 in Reversal

Government-backed U.S. mortgage securities are poised for their biggest monthly gains since 2008 after posting their first annual losses in 19 years, as investors seek havens amid turmoil in developing nations.

Returns in the $5.4 trillion market averaged 1.5 percent in January through yesterday, the largest advance since a 1.7 percent gain in December 2008, according to Bank of America Merrill Lynch index data. The debt lost 1.4 percent last year as investors braced for the Federal Reserve to slow its buying of the bonds and of Treasuries, reductions that began this month.

Agency mortgage securities soared with U.S. government notes amid a rout in emerging markets from Argentina to Turke yand signs of weakness in the world’s two biggest economies even as the Fed said it would make additional cuts to its purchases next month. The central bank’s persistent buying is also supporting the market after a drop in new lending.