Mortgage Rates Approach Records--Again, September 29, 2010

Mortgage rates being offerred by the largest lenders to the best borrowers are approaching the all-time lows they reached in late August.  Two reasons seem to explain the drop: the possibility of more quantitative easing by the Fed and a lack of borrowers at higher rates.  Today should not see much movement in mortgage rates.

Mortgage Rate Trend Direction:     Neutral

Economic Reports/Rate Impact:    No Official Economic Data Released Today

Key News:                                           Irish Bank and Debt Issues, National Commission on Fiscal Responsibility and Reform

Summary

Today could very well be a day of pause for mortgage rates as no official economic data is released to provide directional guidance.  With tomorrow as packed with data as any day I can recall, traders are likely to "keep their powder dry" today and wait for clearer direction.  I expect mortgage rates to open neutral to yesterday's close and remain in a tight range throughout the day.

Impact of economic reports

No official data is to be released today.  The report of lending activity from the Mortgage Banker's Association showed a drop in loan activity which may explain the drop in rates being offerred.  Lenders need loans to fulfill their secondary market commitments and will drop rates to attract more--if there are any more out there.

Impact of international or political events

The Irish parliament is meeting today to take up the issue of Anglo Irish Bank's solvency crisis as well as the issue of the government's solvency.  Analysts will be watching carefully for the solutions propsosed as well as any signs that the crisis in government debt may be spreading to other nations.

The National Commission on Fiscal Responsibility and Reform meets today to take up some of the most difficult long-term challenges faced in the US: social security, Medicare and Medicaid.  The Commission has two months remaining in its tenure before its final report is due to be presented to President Obama.  There is a great deal of skepticism about the Commission's ability to come up with proposals likely to receive bi-partisan support given that we are in the midst of a highly charged midterm election.  I am more optimistic that the Commission will come up with plausible policies, but equally skeptical that Congress will find the will to actually get them implemented.