Daily Mortgage Rate Lock Advisory

Daily Mortgage Rate Lock Advisory Monday 06/22/09

Monday’s bond market has opened in positive territory following heavy selling in stocks. The stock markets are starting the week with the Dow down 135 points and the Nasdaq down 43 points. The bond market is currently up 16/32, which should improve this morning’s mortgage rates approximately .375 – .500 of a discount point over Friday’s morning rates.

There is no relevant economic news scheduled for release today. Tomorrow brings us the first data with the release of May’s Existing Home Sales report. The National Association of Realtors will give us figures on last month’s home resales. This data helps us measure housing sector strength and mortgage credit demand, but it is one of the lesser important reports of the week. It is expected to show an increase in sales from April to May.

The FOMC meeting that begins tomorrow will adjourn Wednesday 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 or inflation, 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 Wednesday afternoon.

Overall, there are six reports scheduled for release this week in addition to the FOMC meeting. The most active day should be Wednesday due to the importance of the data and FOMC meeting. Friday’s news may also affect mortgage rates, but likely not as much as earlier days. This would definitely be a good week to maintain constant contact with your mortgage professional.

Also worth noting is the fact that the Fed will be selling $104 billion in new debt this week. These sales may influence trading enough to affect mortgage rates. There are sales every day except Friday but the two most likely to affect rates are Wednesday and Thursday’s sales. If they are met with a strong demand, we could see bond prices rise some during afternoon trading. This could lead to afternoon improvements to mortgage rates. But, if the sales draw a lackluster interest from investors, mortgage rates may move higher during afternoon trading.

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.

Tags: active day, association of realtors, bond, closing, existing home sales, Float, fomc meeting, future move, home resales, knee jerk reaction, mortgage credit, Mr. Bernanke, national association of realtors, Wednesday, week

Daily Mortgage Rate Lock Advisory – Monday Mar. 16th

Rate Lock Advisory – Monday Mar. 16th

Monday’s bond market has opened flat with the stock markets mixed during early trading. The Dow is currently up 48 points while the Nasdaq has lost 9 points. The bond market is currently nearly unchanged from Friday’s close, but we will still likely see an increase in this morning’s mortgage rates of approximately .250 of a discount point due to weakness Friday.

Today’s only relevant economic news was February’s Industrial Production report. It showed a drop in output at U.S. factories, mines and utilities of 1.4% last month. This was a little weaker than expected but indicates that manufacturing activity was slightly softer than thought. That is good news for bonds and mortgage rates, but not enough to spur a bond rally.

The Labor Department will post February’s Producer Price Index (PPI) early tomorrow morning. This index measures inflationary pressures at the producer level of the economy. There are two portions of the index- the overall rea ding and the core data. The core data is more important and watched more closely because it excludes more volatile food and energy prices. If the index shows a large increase, inflation concerns may rise, making long-term investments such as mortgage-related bonds less attractive to investors. This would lead to higher mortgage rates tomorrow morning. Current forecasts are calling for a 0.4% rise in the overall reading and a 0.1% increase in the core data.

Also tomorrow is the release of February’s Housing Starts, but it will likely not have much of an impact on mortgage rates. It gives us a measurement of housing sector strength and future mortgage credit demand, but is usually considered to be of low importance to the financial markets. It is expected to show a decline in new starts from January to February.

Overall, look for Wednesday to be the most important day of the week due to the CPI release. Tomorrow may also be an active day for rates with t he PPI on tap. But the wildcard is whether stocks continue last week’s gains or if they move lower again. Stock strength would likely draw funds from bonds and lead to higher mortgage rates. However, if the major indexes fall again, funds may shift into bonds, leading to lower mortgage rates.

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 only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009

Tags: active day, bond, closing, core data, February, inflation concerns, mortgage credit, producer level, producer price index, producer price index ppi, release tomorrow, term investments, tomorrow, U.S., volatile food