August 26 2013 market wrap

Mortgage rates continued lower today after a weaker-than-expected economic report this morning from the manufacturing sector.  Not only does weak economic data put downward pressure on interest rates in and of itself, it also helps firm up the consensus on when and how the Fed will begin reducing its asset purchases.  "Sooner and bigger" is worse for rates, but the more weak data, the more the implication shifts towards "later, less, or both." 

The data was out before lender rate sheets and markets had largely reacted to it by then, but MBS (the 'mortgage-backed-securities' that most directly influence mortgage rates) stayed strong all day, indirectly benefiting from the geopolitical risk that was hurting the stock market in the afternoon.  Some lenders released improved rate sheets throughout the day, resulting in a 30yr fixed rate moving firmly back down to 4.625% now , for the most ideal scenarios.  Some lenders are well-priced at 4.5%, but they are the exception.