Daily Mortgage Rate Lock Advisory

Rate Lock Advisory – Friday Mar. 13th

Friday’s bond market has opened in negative territory following a strong open in stocks and comments made by China that raised concerns of potential selling in bonds. However, stocks have since given back their earlier gains. The Dow is now nearly unchanged while the Nasdaq is now down 7 points. The bond market is currently down 26/32, but strength yesterday will likely keep this morning’s mortgage rates close to yesterday’s levels.

The first of today’s two economic reports was January’s Goods and Services Trade Balance report. It showed that the U.S. trade deficit fell to $36.0 billion in January. This was lower than forecasts of a $38.0 billion deficit, but this data usually does not have a major influence on bonds or mortgage rates.

The second report of the morning was the University of Michigan’s Index of Consumer Sentiment for March. It showed a reading of 56.6 that was a little higher than the 55.0 that was expected and a slight increase f rom February’s final reading. This means that consumer confidence was a little stronger than expected. That can be considered bad news for mortgage rates, but since the variance was minor it has not impacted trading this morning.

The comments made by China has some traders believing that they may begin to sell holdings in the near future. Since they hold approximately $727 billion of U.S. debt, or 6% of the total outstanding debt, a selling campaign would likely drive prices lower. Accordingly, traders are taking a cautious approach this morning.

Next week brings us the release of several important reports, including key inflation readings and another FOMC meeting. There is relevant data scheduled for release Monday when February’s Industrial Production data will be posted. 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… 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

Rate Lock Advisory – Thursday Feb. 12th

Thursday’s bond market has opened in negative territory following the release of stronger than expected economic news. The stock markets are showing early losses with the Dow down 125 points and the Nasdaq is down 6 points. The bond market is currently down 8/32, which will likely push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point.

Today’s big economic news was January’s Retail Sales data. It showed an unexpected surprise in sales, indicating that consumers were spending much more than thought. The data revealed a 1.0% rise in sales from December’s revised decline of 3.0%. Analysts were expecting to see a drop in sales, so there was a large variance between forecasts and the actual reading. This has pushed bond prices lower this morning and contributed to today’s increase in mortgage pricing.

The Labor Department gave us weekly unemployment claim numbers this morning also. They reported that new claims f ell from a revised total of 631,000 the previous week to 623,000 last week. However, analysts were expecting to see that 610,000 new claims for benefits were filed, meaning claims were higher than expected. This can be considered good news for bonds, but the sales data is much more important to the markets than weekly unemployment claims. Therefore, it has been a much bigger influence on today’s rates than this report has been.

February’s preliminary reading to the University of Michigan Index of Consumer Sentiment will be released late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows an increase in consumer confidence, the stock markets may move higher and bond prices could fall. It is currently expected to show a reading of 60.2, which would be a decline from January’s final reading of 61.2 and indicate that consumers were less optimistic about their own financial situati ons than last month. This would be good news for bonds and mortgage rates, but after this morning’s surprise in retail level sales it will be interesting to see how accurate forecasts were.

Also worth noting is an early close in the bond market tomorrow ahead of Monday’s President’s Day Holiday. The financial markets will be closed Monday and will reopen Tuesday for normal trading hours.

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.

Rate Lock Advisory – Friday Nov. 14th

Friday’s bond market has opened in positive territory following the release of weaker than expected economic news. The stock markets are posting sizable losses after yesterday’s late rally in stocks hurt bond prices and mortgage rates. The Dow is currently down 260 points while the Nasdaq has lost 60 points. The bond market is currently up 22/32, but due to yesterday’s late losses we likely will not see much of an improvement in this morning’s mortgage rates.

October’s Retail Sales report was posted this morning, showing a surprising drop in sales of 2.8%. This was a larger decline than was expected, the fourth consecutive monthly drop and the largest monthly decline since January 1987. This indicates that the economy is still softening, which is good news for the bond market and mortgage rates.

The second report of the day was the preliminary reading to the University of Michigan’s Index of Consumer Sentiment for this month. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It revealed a reading of 57.9 that was a little stronger than expected, but not enough to negatively affect bond trading.

Next week is moderately busy with economic reports but it does bring us the release of two key inflation readings that can significantly impact bond prices and mortgage rates. The week kicks off Monday with the release of October’s Industrial Production that tracks manufacturing output. This report is considered to have a medium level of importance to the markets and is expected to show a small decline in output.

Besides the two inflation readings and Monday’s manufacturing report, we also will get the minutes from the last FOMC meeting and a couple of other lesser important releases. 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 closin g 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 – Sunday Nov. 9th

This week brings us the release of only three relevant economic reports with only one of them being considered highly important. It is a holiday shortened week with the bond market closing early Monday and remaining closed Tuesday in observance of the Veterans Day holiday.

The first data of the week is September’s Goods and Services Trade Balance report Thursday morning. It helps us measure the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong. This is because the securities’ proceeds are worth more when sold and converted to the investor’s domestic currency. However, its results will not likely directly lead to changes in mortgage rates.

There are two reports scheduled for release Friday. October’s Retail Sales report is the first. This report is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. If this report reveals weaker than expected sales, the bond market should thrive and mortgage rates will fall. Current forecasts are calling for a drop in sales of approximately 1.2%.

The last of the week’s three reports comes late Friday morning when November’s preliminary reading of the University of Michigan’s Index of Consumer Sentiment will be released. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It is expected to show a reading of 57.0, down from October’s final reading of 57.6.

There are 10-year Note and 30-year Bond auctions this week, Wednesday and Thursday respectively. Strong or very weak results from these sales could affect the momentum in the bond market and lead to afternoon changes in mortgage rates. It i s common to see pressure in bonds ahead of these sales, but as long as interest from investors is decent we should see those pre-sale losses recovered during afternoon trading of the sale days.

Overall, look for a fairly quiet week in the mortgage market compared to previous weeks unless something totally unexpected transpires. As long as the stock markets remain fairly calm, I am expecting to see mortgage rates follow suit.

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.