Daily Mortgage Rate Lock Advisory

Friday’s bond market has opened in positive territory after this morning’s economic news failed to bring any negative surprises. The stock markets are in positive territory with the Dow up 15 points and the Nasdaq up 13 points. The bond market is currently up 10/32, which will likely improve this morning’s mortgage rates by approximately .375 of a discount point.

There were two pieces of economic data released this morning. The first was April’s Personal Income and Outlays data that showed personal income and spending both rose 0.2% last month. Forecasts were calling for an increase of 0.2% in both readings, indicating that consumer spending and their ability to spend rose modestly.

The second report of the day came from the University of Michigan who updated their Index of Consumer Sentiment for May. Today’s revision revealed a reading of 59.8 that was up slightly from the earlier estimate of 59.5. This means that consumer sentiment was slightly stronger this month than previously thought, but not enough to have much of an impact on bonds or mortgage pricing.

Even with this morning’s gains, I still believe they overall tone in the bond market is more negative than positive. This will likely lead to not only volatility in bonds but also possibly intra-day changes to mortgage rates. Accordingly, I am holding the lock recommendations for the time being.

Next week is busy with several important economic releases scheduled for the markets to digest. It begins with Monday’s release of May’s ISM manufacturing index and ends with Friday’s posting of May’s Employment report. It will likely be another active week in the mortgage market, but look for details on next week’s events in Sunday’s weekly preview.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Lock if my closing was taking place between 21 and 60 days… Lock if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Thursday’s bond market has opened in negative territory as investor interest appears to be shifting towards stocks and non-mortgage related securities. The stock markets are showing gains with the Dow up 47 points and the Nasdaq up 14 points. The bond market is currently down 23/32, which will likely push this morning’s mortgage rates higher by approximately .500 of a discount point.

There were two pieces of economic data released this morning. The first was the preliminary revision to the 1st quarter Gross Domestic Product (GDP). It matched forecasts with a 0.9% annual pace of growth that was an upward revision from the initial estimate. An important inflation reading in the data also matched forecasts, so today’s report didn’t reveal any surprises.

The Labor Department gave us last week’s unemployment figures, saying that 372,000 new claims for benefits were filed during the week. This was slightly above the 370,000 that was expected, so had little impact on bond trading or mortgage rates because this data is generally of low importance to the markets unless it varies greatly from forecasts.

Tomorrow brings us the release of two pieces of data with the first being April’s Personal Income and Outlays data at 8:30 AM. This report gives us an indication of consumer ability to spend and current spending habits. An increase in income means that consumers have more money available to spend. Since consumer spending makes up two-thirds of the U.S. economy, this data can cause movement in the financial markets and mortgage rates. Current forecasts are showing a 0.2% rise in income and a 0.2% increase in spending. Weaker readings would be considered good news for bonds and mortgage rates.

The last report of the week will come from the University of Michigan who will update their Index of Consumer Sentiment for May. It measures consumer willingness to spend by tracking their confidence in their own f inancial situations. An upward revision from the preliminary 59.5 reading would be considered a negative for bonds.

Yesterday’s bond weakness that has carried over into this morning’s trading pretty much answers the question proposed yesterday if 4.00% is going to be a level of upward resistance. There seemed to be very little resistance as bond prices dropped over the past 24 hours and the yield on the benchmark 10-year Note shot up to 4.10%. I suspect that this may now be the lower end of a new trading range if this level holds for another day. That means that bond prices are more likely to fall than they are to rise, leading to upward movement in yields and mortgage rates. Accordingly, I am holding the lock recommendations across the board until we have stability below that level.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Lock if my closing was taking place between 21 and 60 days… Lock if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Tuesday’s bond market has opened down slightly despite a weaker than expected consumer confidence reading. The stock markets are mixed with the Dow down 10 points and the Nasdaq up 9 points. The bond market is currently down 7/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point.

The Conference Board started this week’s economic releases with their Consumer Confidence Index (CCI) May. It showed a weaker than expected level of confidence with a reading of 57.2 when it was forecasted to stand at 60.0. This was the lowest reading in 16 years, indicating that consumers are not very optimistic about their personal financial situations. This is considered good news for bonds and mortgage rates because it usually means consumers are less likely to make large purchases in the near future.

April’s New Home Sales data was also released today, revealing a higher level of sales than was expected. However, today’s report also revised March’s sales lower. This means that sales were weaker than thought in March, but the month to month increase was fairly large. This is bad news for bonds because a weak housing sector usually translates into weaker economic conditions in general. But, this data is not considered to be of high importance to the bond market and mortgage rates, so its impact on today’s pricing was fairly minimal.

Tomorrow morning we will see April’s Durable Goods Orders data. This report gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. It is currently expected to show a decline in new orders of approximately 1.5%. If this report shows a stronger than expected reading, we should see mortgage rates rise because it indicates manufacturing growth. If it shows a larger than expected drop, we should see rates improve tomorrow morning.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

This holiday shortened week brings us the release of six important economic reports or news releases. Two of the six are considered to be of high importance to the bond market and mortgage pricing with one being of low importance. The remaining reports are considered to be of moderate importance to the markets. The financial and mortgage markets are closed tomorrow in observance of the Memorial Day holiday and will reopen Tuesday morning.

The Conference Board will start the week’s releases by posting their Consumer Confidence Index (CCI) at 10:00 AM Tuesday. This is a very important release that measures consumer willingness to spend. If the index rises, it indicates that consumers feel better about their personal financial situations and are more apt to make large purchases. If confidence is sliding, analysts think consumer spending may slow in the near future. The latter is good news for the bond market because it should ease concerns about inflationary pr essures, making bonds more attractive to investors. This should boost bond prices and push mortgage rates lower Tuesday morning. It is expected to show a reading of 61.0 after April’s 62.3 reading.

April’s New Home Sales data will be released late Tuesday morning. This report gives us a measurement of housing sector strength and future mortgage credit demand. However, it is actually the least important release of the week and probably will not have much of an impact on mortgage pricing. It is expected to show another decline in sales.

Wednesday morning we will see April’s Durable Goods Orders data. This report gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. It is currently expected to show a decline in new orders of approximately 0.7%. If this report shows a stronger than expected reading, we should see mortgage rates rise because it indicates manufacturing growth. If it shows a large r than expected drop, we should see rates improve Wednesday morning.

The first of two revisions to the 1st quarter Gross Domestic Product (GDP) will be released at 8:30 AM Thursday. The second revision to this report comes next month but isn’t expected to have much of an impact on the financial markets. The GDP is the sum of all goods and services produced in the U.S. and is considered to be the best indicator of economic growth. Last month’s preliminary reading revealed a 0.6% annual rate of growth. Analysts expect an upward revision to this reading with the consensus being a .9% annual rate. If true, we may see the bond market react negatively and mortgage rates move higher.

Friday brings us the release of two pieces of data with the first being April’s Personal Income and Outlays data at 8:30 AM. This report gives us an indication of consumer ability to spend and current spending habits. An increase in income means that consumers have more money available to spend. Since consumer spending makes up two-thirds of the U.S. economy, this data can cause movement in the financial markets and mortgage rates. Current forecasts are showing a 0.4% rise in income and a 0.4% increase in spending. Weaker readings would be considered good news for bonds and mortgage rates.

The last report of the day and the last important data of the week will come from the University of Michigan who will update their Index of Consumer Sentiment for May. An upward revision would be considered a negative for bonds.

Overall, I think we have a busy week ahead of us. With the markets closed tomorrow, Tuesday’s data will set the tone for the first part of the week. The big reports of the week are Tuesday’s CCI and Wednesday’s Durable Goods. If Thursday’s GDP revision varies greatly from forecasts, it can also lead to sizable changes in rates.

If I were considering financing/refinanc ing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Friday’s bond market has opened in positive territory as stocks react negatively to rising oil prices. The stock markets are showing sizable losses with the Dow down 111 points and the Nasdaq down 27 points. The bond market is currently up 14/32, which will likely improve this morning’s mortgage rates by approximately .1250 - .250 of a discount point.

The National Association of Realtors gave us today’s only semi-relevant economic news with the release of April’s Existing Home Sales report. It revealed a decline in sales, but not as much of a drop as expected. However, the data has not influenced bond trading enough to affect mortgage rates this morning.

The bond market will close at 2:00 PM today ahead of Monday’s Memorial Day Holiday and will remain closed until Tuesday morning. The stock markets will also be closed Monday. I don’t think that this will have an impact on this afternoon’s mortgage rates.

Next week brings us the releas e of several pieces of important economic data. There are relevant reports scheduled for release each of the four business days, so we will likely see some volatility in rates. Look for more details on next week’s events in Sunday’s weekly preview.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Thursday’s bond market has opened down sharply as concerns about inflation take their toll. The stock markets are showing moderate gains with the Dow up 37 points and the Nasdaq up 14 points. The bond market is currently down 27/32, which will likely push this morning’s mortgage rates higher by approximately .250 - .375 of a discount point.

The Labor Department gave us today’s only economic reading with the release of weekly unemployment figures. They reported that 365,000 new claims for benefits were filed last week. This was down from the previous week and lower than the 372,000 that were expected. However, this data is not considered to be of high importance and had a minimal impact on today’s bond trading or mortgage rates.

Yesterday’s release of the minutes from the last FOMC meeting led to some volatility in the markets late yesterday and again this morning. The minutes revealed that the vote for the last rate cut was close and that ther e are obvious concerns not only about economic growth and activity but also about inflation. This has made long-term securities such as mortgage related bonds less attractive to investors because inflation erodes the value of a bond’s future fixed interest payments. Traders then need to sell them at a discount to offset that loss in order for an investor to purchase it. The result is bond prices falling while yields and mortgage rates rise.

The National Association of Realtors will give us the Existing Home Sales report tomorrow morning. This data tracks resales of homes in the U.S., giving us a measurement of housing sector strength. It is not considered to be of much importance to the bond market unless it varies greatly from forecasts. Current forecasts are calling for a decline in sales between March and April.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing w as taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Wednesday’s bond market has opened in negative territory as investors prepare for today’s FOMC minutes. The stock markets are posting another round of losses with the Dow down 97 points and the Nasdaq down 8 points. The bond market is currently down 9/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point.

There was no relevant economic news posted today. The only relevant news we really need to worry about are the minutes from the last FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy. The goal is to form a guess about what the Fed’s next move will be. The minutes will be released at 2:00 PM ET, so if there is a market reaction to them it will be evident during afternoon trading.

Tomorrow brings us no relevant economic data except for weekly unemployment claims from the Labor Department. T hey are expected to report that 372,000 new claims for benefits were filed last week. However, since this data tracks only a week’s worth of numbers, it likely will not influence mortgage rates unless it varies greatly from forecasts.

I would not be surprised to see stock prices continue to fall over the next few days. They seem to be reacting to high oil prices. If this is true, we should see funds shift into bonds as a safe haven, leading to improvements in mortgage rates. Accordingly, I am holding the float recommendations for short and longer periods for the time being.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Float if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is o nly an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.