Daily Mortgage Rate Lock Advisory

Rate Lock Advisory – Tuesday Feb. 10th

Tuesday’s bond market has opened well into positive territory as last night’s speech by President Obama and his bank bailout plan are being received favorably. The stock markets are not reacting as well to the news with the Dow down 295 points and the Nasdaq down 49 points. The bond market is currently up 28/32, which should improve this morning’s mortgage rates by approximately .250 – .375 of a discount point.

Fed Chairman Bernanke will be speaking before the House Financial Services Committee at 1:00 PM ET today. He is expected to testify and update the panel on the Fed’s liquidity injections and future plans. His words could create movement in the markets and possibly mortgage pricing during afternoon trading. After this morning’s warm reception to the President’s plan, I don’t think that it is likely that we will have a negative reaction to Chairman Bernanke’s testimony.

However, this week begins the quarterly refunding or sales of government debt that has had traders so concerned about recently. We will likely see more volatility as the week goes on, and as the sales take place. A total of $67 billion in new debt is being sold this week, which had raised concern about demand for current debt already in the market. That is what has pressured bonds recently and helped drive mortgage rates higher. If the market can get by that stigma or concern, we could see mortgage rates rally in the coming weeks.

There was no relevant data scheduled for release this morning. Tomorrow brings us the first of this week’s three releases when the least important of them, December’s Goods and Services Trade Balance, will be posted. This report measures the U.S. trade deficit and can affect the value of the U.S. dollar versus other currencies, but it usually does not cause enough movement in bond prices to affect mortgage rates.

If I were considering financing/refinancing a home, I w ould…. 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.

Rate Lock Advisory – Friday Oct. 3rd

Friday’s bond market has opened in negative territory despite favorable results from the Employment report that was posted this morning. The stock markets are rallying as optimism about the House approving the bailout plan grows. The result is a 201 point gain in the Dow and the Nasdaq rising 57 points. The bond market is currently down 24/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point.

The Labor Department reported this morning that the U.S. Unemployment Rate remained at 6.1% last month, as it was in August. The good news came in the form of the number of payrolls lost and the average earnings reading. Today’s report showed that 159,000 jobs were lost during the month, exceeding the 105,000 loss that was expected. It was also the ninth consecutive monthly loss and the biggest monthly decline since March 2003. The average hourly earnings was forecasted to rise 0.3%, but rose only 0.2%. Both of those readings are favorable to bonds and mortgage rates because they indicate that the employment sector is still weakening and that wages are not rising as quickly as thought.

I would not be surprised to see afternoon revisions to mortgage rates if stock prices continue to rise or give back their current gains. The bond market has been at the mercy of stocks the past two weeks and we may see more volatility this afternoon as the debate about the bailout measure continues. The House could bring the bill to a vote this afternoon, which may heavily influence the markets and mortgage rates. It the vote appears likely to pass, the stock markets will likely rise and bond prices will fall, leading to higher mortgage rates. However, if concern rises that the vote will fail, we could see stock prices fall and bond prices rise enough to improve mortgage pricing this afternoon.

Next week is very light in terms of economic releases scheduled. There is littl e relevant data on the calendar for next week, but we will get the minutes from the last FOMC meeting. Look for more details on next week’s event s 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… 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.

Rate Lock Advisory – Wednesday Oct. 1st

Wednesday’s bond market has opened in positive territory as investors show concern about today’s Senate vote on the Fed bailout plan. The stock markets are showing losses with the Dow down 113 and the Nasdaq down 22 points following yesterday’s record gain in the Dow. The bond market is currently up 33/32, but we will still see an increase in this morning’s mortgage rates of approximately .375 of a discount point due to yesterday’s sell-off in bonds as stocks rallied.

Also helping boost bonds today was a large drop in the Institute for Supply Management’s (ISM) manufacturing index for September. Today’s release revealed a reading of 43.5, which was its lowest reading since October 2001. Analysts were expecting to see a reading of 49.5, meaning manufacturer sentiment about business conditions was much lower than thought. This is good news for bonds because a weakening manufacturing sector indicates slowing economic activity and eases inflation concerns.

We need to again keep an eye on the stock markets and Fed bailout vote. The Senate is expected to vote on their plan this evening, after the markets close. Current polls are expecting the measure to pass the Senate vote, but the real question is what the House will do with it once they get it. Since current expectations are showing passage by the Senate, I don’t think we will see a massive sell off in stocks again today. It seems that the markets are more concerned about the House approving the bill if the Senate does approve it. As we get closer to the House vote, we will likely see the volatility in stocks rise.

The Commerce Department will post August’s Factory Orders data late tomorrow morning. This manufacturing sector report is similar to last week’s Durable Goods Orders release, but includes orders for non-durable goods. It can usually impact the financial markets enough to change mortgage rates if it varies from forecasts by a wide margin. Cu rrent forecasts are calling for a decline in new orders of approximately 2.9%. An unexpected rise could drive mortgage rates higher, while a weaker than expected reading should push them lower tomorrow. However, look for the results form tonight’s Senate vote to heavily influence trading in the markets 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… Lock 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.

Rate Lock Advisory – Thursday Sep. 25th

Thursday’s bond market has opened in negative territory after the stock markets have opened with strong gains. Stocks are rallying after some of the hurdles that may have prevented the bailout plan from being approved appear to have been tackled. The result is the Dow up 202 points and the Nasdaq gaining 35 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.

The Commerce Department gave us August’s Durable Goods Orders results this morning, saying that new orders for big-ticket items fell 4.5% last month. This drop was over four times analysts’ forecasts, meaning that the manufacturing sector was much weaker than thought. This is considered to be good news for bonds and mortgage rates because slowing economic activity will likely ease inflation concerns and make long term securities such as mortgage-related bonds more attractive to investors.

Augus t’s New Home Sales were also posted this morning, showing that sale of newly constructed homes fell to their lowest level since October 1991. This strongly indicates that the housing sector is still weakening and not ready to bottom out yet. That is also good news for the bond market and mortgage rates.

There are two reports scheduled for release tomorrow. The first is the final revision to the 2nd Quarter Gross Domestic Product (GDP). Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don’t see this revision having much of an impact on the financial markets or mortgage pricing. It is expected to show a slight increase from the previous estimate of a 3.3% annual rate.

The final report of the week is Friday’s release of the University of Michigan’s Index of Consumer Sentiment. This is the revised reading for September. The preliminary reading that was released earlier this month revealed a 73 .1 reading. Analysts are expecting to see a downward revision to 70.9, meaning confidence was weaker than previously thought. A lower than expected reading should help improve mortgage rates 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… Lock 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.