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Another Sign of Housing Strength – Purchase Applications Rise:

Applications for U.S. home mortgages edged up last week, boosted by stronger demand for purchases for the second week in a row.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 0.1 percent in the week ended April 27.

The MBA’s seasonally adjusted index of loan requests for home purchases gained 2.9 percent, but the gauge of refinancing applications slipped 0.7 percent.

The refinance share of total mortgage activity eased to 72.6 percent of applications from 73.4 percent the previous week.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to the MBA.

This two week trend of stronger applications for a mortgage to purchase a home mirrors the much better than expected Pending Home Sales report last week.

What Happened to Rates Last Week?

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Mortgage backed securities (MBS) gained +50 basis points from last Friday to the prior Friday which caused mortgage rates to move lower.

The highest rates of the week were on Tuesday and the lowest rates of the week were on Friday.

MBS traded in a very narrow range all week as we had a mixed bag of economic news.

But MBS moved sharply higher (causing lower mortgage rates which move in an inverse direction) on the much weaker than expected Unemployment data. Yes, the Unemployment Rate dropped from 8.2% to 8.1% – on the surface that would appear to positive for the job picture. But the Unemployment Rate is an outdated and highly manipulated calculation based upon very old technology (phone surveys), the vast majority of economists and traders put little stock in that number.

Instead, they focus on the Non-Farm Payroll data. This is calculated using peoples paychecks and is considered to be much more accurate. And with this latest Non-Farm Payroll data, the market received a big disappointment. The market was expecting a gain of approximately 165K jobs. But instead, we only saw a gain of 119K. This miss to the down side caused bonds to rally (they generally react well to poor economic news).

What to Watch Out For This Week:

The following are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.

I will be watching these reports closely for you and let you know if there are any big surprises:

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It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Quote of the week:

“Alternatives to foreclosure, such as loan modifications and short sales, are being used to clear out inventory…and at the same time, there were fewer homes awaiting foreclosure.” – Anand Nallathambi, chief executive officer of CoreLogic

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Vince Reece
Senior Loan Officer
Office: 303-840-0966
Cell: 303-818-0699
19519 E Parker Square Dr
Parker, CO 80134

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