Daily Mortgage Rate Lock Advisory

Monday’s bond market has opened that week flat as have the stock markets. The Dow is currently up 3 points while the Nasdaq is nearly unchanged from Friday’s close. The bond market is also nearly unchanged, but due to strength in bonds late Friday we should see an improvement in today’s mortgage rates of approximately .375 of a discount point.

This week brings us the release of very few economic reports for the markets to digest. There are only three monthly reports scheduled for release that are likely to affect mortgage rates, but one of them is arguably the most influential single piece of data that we see each month. This is a shortened trading week with the markets closed Friday and an early bond market close Thursday in observance of the Independence Day holiday.

The first of the week’s three reports is of fairly high importance to the bond market. The Institute of Supply Management (ISM) will release their manufacturing index for June late tomorrow morning. This index measures manufacturer sentiment by surveying trade executives on current business conditions. A reading below 50 means that more surveyed executives felt business improved than those who felt it had worsened. Analysts are expecting to see a reading of approximately 48.6, meaning that sentiment fell from May’s level. That would be considered good news for bonds and mortgage rates.

Overall, I am expecting to see the most movement in rates the latter part of the week. Tomorrow morning should bring some volatility with the ISM index, but Thursday’s Employment report is definitely the most important of the week and can single handily lead to an improvement or increase in mortgage rates for the week.

If I were considering financing/refinancing a home, I would…. Float 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 6 0 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 week brings us the release of very few economic reports for the markets to digest. There are only three monthly reports scheduled for release that are likely to affect mortgage rates, but one of them is arguably the most influential single piece of data that we see each month. This is a shortened trading week with the markets closed Friday and an early bond market close Thursday in observance of the Independence Day holiday.

The first of the week’s three reports is of fairly high importance to the bond market. The Institute of Supply Management (ISM) will release their manufacturing index for June late Tuesday morning. This index measures manufacturer sentiment by surveying trade executives on current business conditions. A reading below 50 means that more surveyed executives felt business improved than those who felt it had worsened. Analysts are expecting another reading below 50.0. That would indicate that manufacturers felt business remained close to unchanged from the previous month. Good news would be a weaker than expected reading.

The Commerce Department post May’s Factory Orders data late Wednesday morning, which is similar to the Durable Goods Orders report that was released last week. The biggest difference being that this week’s report covers both durable and non-durable goods. It usually doesn’t have as much of an impact on the bond market as the durable goods data does, but can lead to changes in mortgage pricing if it varies from forecasts. Current expectations are showing a 0.6% rise in new orders from April’s levels. A smaller than expected rise in orders would be considered good news for the bond market and should help lower mortgage rates slightly Wednesday.

The only other important release of the week comes early Thursday morning. The Labor Department will give us June’s unemployment rate, number of new payrolls added and average hourly earnings. These are considered to be very impo rtant readings of the employment sector and can have a huge impact on the financial markets.

The ideal scenario for the bond market is rising unemployment, a decline in payrolls and no change in earnings. Weaker than expected readings should help boost bond prices and lower mortgage rates. However, stronger than forecasted readings could be disastrous for mortgage pricing. Analysts are expecting to see the unemployment rate to slip 0.1% to 5.4%, while 50,000 jobs were lost and a 0.3% rise in earnings.

Overall, I am expecting to see the most movement in rates the latter part of the week. Tuesday morning should bring some volatility with the ISM index, but Thursday’s report is definitely the most important of the week and can single handily lead to an improvement or increase in mortgage rates for the week.

If I were considering financing/refinancing a home, I would…. Float 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 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 stock prices continue to fall. The major stock indexes are showing losses again as yesterday’s major sell-off seems to be carrying into today’s trading. The Dow is currently down 58 points while the Nasdaq has fallen 11 points. The bond market is currently up 12/32, pushing the yield on the benchmark 10-year Treasury Note below 4.00%. This should improve this morning’s mortgage rates by approximately .125 of a discount point.

Today’s most important data was the release of May’s Personal Income and Outlays figures. They showed that personal income rose a whopping 1.7% last month, greatly exceeding forecasts of a 0.4% rise. However, most of the surprise increase was a result of the economic stimulus checks and not due to rising wages. The spending portion of the report revealed a 0.8% rise, which slightly exceeded forecasts. Also worth noting is that an inflation reading in the data came in slightly lower than forecasts, so overall, this data can be considered favorable to bonds and mortgage rates.

The second report of the day was the University of Michigan’s Consumer Sentiment Index’s final reading for June. It showed a modest downward revision of 0.3%, meaning consumer confidence was less than expected. This can also be considered good news for bonds, but this revision is not important enough to heavily influence trading or mortgage rates.

Next week doesn’t bring us the release of many reports, but the majority of those on the schedule are considered to be of high-importance to the markets. There is no relevant data due to be posted Monday, but Tuesday does bring us one of the more important reports of the week. Look for more details on next week’s events in Sunday’s weekly preview.

If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… Float if my closing was taking pla ce 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 in positive territory as stock prices are showing significant losses during early trading. The stock markets are reacting to downgrades and fears of future problems in the banking sector. This has led to the Dow dropping 214 points and the Nasdaq falling 59 points. The bond market is the benefactor as investors seek safe haven from the volatility. With the bond market currently up 8/32, we will likely see an improvement in mortgage rates of approximately .125 - .250 of a discount point.

There were a couple of pieces of economic data released this morning, but none are considered to be of high importance. The final reading to the 2nd quarter GDP matched forecasts at up 1.0%. This was slightly higher than the previous estimate that was announced last month. An important inflation component of the data also was revised higher by 0.1%, but has not impacted bond trading or mortgage rates.

The National Association o f Realtors released May’s Existing Home Sales report that tracks home resales in the U.S. It showed an increase in sales compared to April’s numbers, but this data usually is of low importance to the markets and mortgage rates.

The Labor Department gave us weekly unemployment figures from last week, saying that new claims for benefits rose to 384,000, when analysts were expecting to see a drop in claims. This brings the total back near the important benchmark of 400,000. However, this data also usually has little influence on mortgage rates. But, if the number of claims continues to move higher, this release will likely be watched more closely.

Also worth noting is today’s 5-year Treasury Note auction. This sale can affect bond prices and therefore mortgage rates if investor interest in the sales are met with a strong or poor demand. The results will be posted at 1:00 PM ET today. If demand was strong, we should see bond prices improve during afte rnoon trading. However, a lackluster interest in the sale could lead to bond weakness later today and possibly higher mortgage rates.

May’s Personal Income and Outlays data will be posted early tomorrow morning. This report gives us an indication of consumer ability to spend and current spending activity. Analysts are expecting to see an increase of 0.4% in income and a 0.7% rise in the spending portion of the report. Smaller than expected increases should be good news for the bond market and mortgage rates.

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.

WEDNESDAY AFTERNOON UPDATE:

This week’s FOMC meeting has adjourned with an announcement that no change was made to key short-term interest rates, which was the first time in the past nine months. This was widely expected, but the post-meeting statement did indicate concerns about inflation. This has helped push bond prices lower than pre-adjournment levels. However, they have not moved enough as of yet to likely cause afternoon revisions to mortgage rates. I am expecting most lenders to reflect these changes in tomorrow’s rates.

The stock markets have improved from this morning’s levels with the Dow 92 points and the Nasdaq up 48 points. The bond market is currently down 12/32. If bond prices fall much further, we may see upward revisions to mortgage rates by the end of business. If they remain near current levels, the increase will probably be reflected in tomorrow’s pricing.

The Commerce Department gave us May’s Durable Goods Orders this morning, announcing no change in orders for big-ticket items between April and May. This was expected and therefore had little impact on the bond markets or mortgage rates.

Also posted this morning was May’s New Home Sales report. It showed a decline in sales of newly constructed homes between April and May, but to a level that was expected. With this data being considered of low importance and the fact that it came very close to analysts’ forecasts, this data has been a non-factor in this morning’s trading.

The only relevant economic data scheduled for release tomorrow is the final reading to the1st Quarter GDP and weekly unemployment claims. The GDP data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Last month’s first revision showed a 0.9% rate of growth, but analysts are expecting to see an upward revision to 1.0%.

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.

Wednesday’s bond market has opened in negative territory following early stock gains. The stock markets are trading in positive territory with the Dow up 74 points and the Nasdaq 39 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 Commerce Department gave us May’s Durable Goods Orders this morning, announcing no change in orders for big-ticket items between April and May. This was expected and therefore had little impact on the bond markets or mortgage rates.

Also posted this morning was May’s New Home Sales report. It showed a decline in sales of newly constructed homes between April and May, but to a level that was expected. With this data being considered of low importance and the fact that it came very close to analysts’ forecasts, this data has been a non-factor in this morning’s trading.

The FOMC meeting will adjourn at 2:15 PM ET today. It is widely expected that Mr. Bernanke and company will not change key short-term interest rates at this meeting, so the markets will be watching their post-meeting statement for any indication of the Fed’s next move. Many analysts now think the Fed will need to raise key short-term interest rates before they make any further cuts. The statement likely will not give a clear definitive answer to this question, but it could help fuel theories by market participants that will cause plenty of volatility in the markets this afternoon.

I still think that we will hear words of concern about inflation in the economy as a result of high fuel prices. This could lead to higher mortgage rates this afternoon if accurate. Look for an update to this report after the markets have an opportunity to react to the announcement and post-meeting statement.

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 in positive territory following the release of much weaker than expected economic data. The stock markets are showing losses with the Dow down 71 points and the Nasdaq down 22 points. The bond market is currently up 12/32, which will likely improve this morning’s mortgage rates by approximately .125 of a discount point.

The Conference Board posted June’s Consumer Confidence Index (CCI) late this morning, revealing a reading of 50.4. This was much lower than the forecasted reading of 56.0 and was the lowest reading since February 1992. This indicates that consumers are much less optimistic about their own financial situations than many had thought. That is considered good news for bonds and mortgage rates because the falling confidence usually means consumers are less apt to make large purchases in the near future. With consumer spending making up two-thirds of the U.S. economy, any related data often has a big impact on the markets.

The only important release scheduled for tomorrow is May’s Durable Goods Orders, which gives us an indication of manufacturing sector strength. It is known to be quite volatile from month to month and is expected to show no change new orders from April to May. A decline in new orders would be the ideal scenario for the bond market and could lead to a decline in mortgage pricing tomorrow morning. However, tomorrow afternoon’s events will probably influence rates much more than the day’s data will.

There are two housing related reports scheduled for release this week, with the first coming tomorrow morning. May’s New Home Sales will be released tomorrow while Existing Home Sales will be posted Thursday morning. These reports give us a measurement of housing sector strength and mortgage credit demand, but usually do not cause much movement in mortgage rates.

The FOMC meeting that began today will adjourn tomorrow afternoon. It is widely expected that Mr. Bernanke and company will not change key short-term interest rates at this meeting. But, as we have seen so many times in the past, it is the post meeting statement that often creates the most volatility in the markets. They could give an opinion of the overall economy, hinting at a possible future move or lack of one. Statements like these could cause a knee-jerk reaction in the markets and possibly mortgage pricing tomorrow afternoon. I suspect we will hear concerns about inflation that will lead to selling in bonds that will drive mortgage rates higher.

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.