Market Analysis

The market strengthened yesterday and then has opened down this morning.  It is also currently worsening, so we may see a revised rate sheet this morning. The May Durable Goods Orders report was almost right in line with projections showing no change vs an expected .1% increase.   This was an improvement over the declines seen over the past 2 months.  May New Home Sales fell 2.5% vs an estimated 3.0% decline.  Better than expected economic reports tend to put pressure on mortgage rates.  The Fed concludes their 2 day June meeting today.  They are not expected to change rates.  Investors are looking closely at their post meeting comments for hints of when rate increases may begin.

Below is a chart from Bankrate.com which tracks the rates in Texas for 30 yr and 15 yr mortgages to the Fed Funds Rate.  It is interesting to note the trajectory differences for mortgage rates compared to the Fed Funds rate over the past quarter and it reflects the fact that investors in mortgage-backed securities do not follow the Fed's moves in lock step.  There is a common misperception that the Federal Reserve controls mortgage rates.  Our rates are determined by the market action of the Fannie Mae and Freddie Mac mortgage-backed securities which trade on the open market.