Daily Mortgage Rate Lock Advisory

Rate Lock Advisory – Friday Jan. 30th

Friday’s bond market has opened in positive territory following early stock weakness and mixed economic news. The stock markets are showing sizable losses with the Dow down 154 points and the Nasdaq down 20 points. The bond market is currently up 10/32, but we will still see a sizable increase in this morning’s mortgage rates due to significant weakness in bonds yesterday afternoon. We will likely see an increase of approximately .500 – .625 of a discount point over yesterday’s morning rates.

Today brought us the release of three relevant reports, including the very important preliminary GDP reading that showed a decline of 3.8% during the 4th quarter of last year. This was not as big of a drop as was expected, but was still the largest quarterly decline in 26years. This can be considered bad news for bonds because the drop was not as much as expected, however, it still being the worst quarter since 1982 indicates a weak economy. That generally makes bo nds more attractive to investors and leads to lower mortgage rates. Unfortunately, it was not enough to offset yesterday’s losses or the fact that economy activity was actually stronger than expected.

The 4th Quarter Employment Cost Index (ECI) was also posted this morning, but it came in lower than forecasts. The 0.5% increase compared to the 0.7% that was expected, means that employer costs for wages and benefits did not rise as much as thought. That is good news for bonds because it eases concerns of wage inflation.

The third report was the revised reading to the University of Michigan’s Index of Consumer Sentiment. It showed a reading of 61.2 that was slightly lower than the 61.9 that the preliminary reading showed earlier this month.

Next week is packed with important and relevant economic data for the markets to digest. It begins with December’s Personal Income and Outlays data and January’s Institute for Supply Management’s (ISM) manufacturing index Monday. The week closes with the almighty Employment report Friday morning and in between are several important releases. Look for more details on next weeks 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.

Rate Lock Advisory – Friday Oct. 31st

Friday’s bond market has opened in positive territory, allowing mortgage rates to recover part of this week’s losses. The stock markets are showing small gains with the Dow up 25 points and the Nasdaq up 3 points. The bond market is currently up 17/32, which will likely improve this morning’s mortgage rates by approximately .375 of a discount point.

None of today’s three economic reports gave us any major surprises. The Labor Department said that the 3rd Quarter Employment Cost Index (ECI), which tracks employer costs for salaries and benefits, rose 0.7% last quarter. This was expected and has not had much of an influence on the markets.

September’s Personal Income and Outlays report revealed a 0.2% rise in income and a 0.3% decline in spending. The income reading was slightly higher than expected, meaning that consumers had a little more income to spend that thought. The drop in spending was bigger than forecasted, meaning consumers were spend ing less than thought. The income reading can be considered negative news for bonds, but the drop in spending offsets that news. Therefore, this report also failed to push the markets either way.

The week’s last report was the University of Michigan’s revision to their Index of Consumer Sentiment for this month. It showed a reading of 57.6 that nearly matched forecasts of no change to the 57.5 preliminary reading. Again, this data had little impact on the markets and mortgage rates.

Next week is fairly active in terms of economic releases for the markets to digest. Monday brings us the first with the release of the Institute for Supply Management’s manufacturing index. This is usually the first report we see each month and is considered to be pretty important. It is expected to show that manufacturer sentiment slipped further in October.

The rest of the week also brings us some important data including October’s employment numbers next Fr iday. Look for more details on next week’s releases and 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 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 – Thursday Oct. 30th

Thursday’s bond market has opened in negative territory following the release of a stronger than expected GDP reading and early stock gains. The Dow has risen 132 points while the Nasdaq has gained 30 points. The bond market is currently down 17/32, which will likely push this morning’s mortgage rates higher by approximately .375 of a discount point.

This morning’s big news was the preliminary reading of the 3rd Quarter Gross Domestic Product (GDP). The GDP is considered to be the benchmark measurement of economic growth because it is the sum of all goods and services produced in the U.S. It revealed a decline of 0.3%, its worst reading in seven years. It also was only the fifth time in 17 years that the quarterly GDP has fallen. However, analysts were expecting to see a 0.5% decline, therefore, the numbers weren’t as bad as expected. Also contributing to this morning’s losses was a key inflation reading in the data that showed a larger than expected inc rease. This raised some inflation concerns and contributed to the weak opening in bonds.

The Labor Department posted weekly unemployment figures this morning, saying that 479,000 new claims were filed last week. This was nearly unchanged from the previous week, but was slightly higher than forecasts. However, there is no comparison between the importance of this data and the GDP. With the GDP being considered a very highly important report, the markets ignored the weekly claims figures.

There are three reports scheduled for release tomorrow. The first is the 3rd Quarter Employment Cost Index (ECI), which tracks employer costs for salaries and benefits. Rapidly rising costs raises wage inflation concerns and may hurt bond prices. It is expected to show an increase in costs of 0.7%. A smaller than expected increase would be good news for bonds and mortgage rates.

September’s Personal Income and Outlays report will also be posted early tomor row. This data gives us an indication of consumer ability to spend and current spending habits. It is important to the markets because consumer spending makes up two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. This is bad news for the bond market and mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. Analysts are expecting to see an increase of 0.1% in income and decline in outlays of 0.2%.

The week’s last report comes at 10:00 AM ET tomorrow when the University of Michigan updates their Index of Consumer Sentiment for this month. Current forecasts show this index remaining nearly unchanged from this month’s preliminary reading of 57.5. This index is important because it helps us measure consumer confidence, which is believed to indicate consumers’ willingness to spend. Since consumer spending makes up two-thirds of the U.S. economy, any related data is considered to be important.

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.

Tuesday’s bond market has opened in negative territory following the release of stronger than expected economic data and early stock gains. The stock markets are in positive territory with the Dow up 25 points and the Nasdaq up 20 points. The bond market is currently down 13/32, but we likely will not see much change in this morning’s mortgage rates due to strength in bonds late yesterday.

The Commerce Department reported late this morning that April’s Factory Orders rose 1.1%. This greatly exceeded forecasts of a 0.1% decline and indicated that the manufacturing sector was stronger than thought. This is considered to be negative news for bonds and mortgage rates because a growing manufacturing sector is a strong sign of overall economic growth.

Tomorrow morning brings us the release of two pieces of economic data for the markets to digest. The first is the revised 1st Quarter Productivity and Costs reading. This index measures employee output a nd employer costs for wages and benefits. It is considered to be a measurement of wage inflation. It is believed that the economy can grow with low inflationary pressures when productivity is high, so this type of data can influence trading and mortgage rates. Last month’s preliminary reading revealed a 2.2% rate, but I don’t think this revision will have much of an impact on the bond market or mortgage pricing unless it varies greatly from its forecasted reading of 2.5%.

The second report of the day may have a significant impact on the markets or be a non-factor depending on its result. The Institute for Supply Management will release its services index late Wednesday morning. It is expected to show a reading of 51.0, with the same principals as Monday’s manufacturing index. If this reading varies greatly from forecasts, we may see volatility in the markets and mortgage rates. However, if its results are in the general area of expectations, it will likely have n o influence on the markets and mortgage pricing.

There is no relevant data scheduled for release Thursday except weekly unemployment figures. However, market participants will be preparing for Friday’s key Employment report for the month of May. This report will likely lead to plenty of volatility in the markets even if its results vary slightly from forecasts.

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.

This week brings us the release of a couple important pieces of economic data in addition to some moderately important reports. There are a total of four or five reports that are worth watching and are most likely to affect mortgage rates.

The first is the Institute for Supply Management’s (ISM) manufacturing index late tomorrow morning. This highly important index measures manufacturer sentiment. A reading below 50 means that more surveyed manufacturing executives felt that business worsened during the month than those who felt it had improved. A sub-50 reading is also considered recessionary news. Analysts are expecting to see a 48.0 reading in this month’s release, meaning that sentiment slipped slightly during May. A smaller reading will be good news for the bond market and mortgage shoppers while an unexpected increase could contribute to higher mortgage rates.

Tuesday’s only relevant news is the Commerce Department’s release of April’s Factory Orders data. This manufacturing sector report is similar to last week’s Durable Goods Orders release, but also includes orders for non-durable goods. It can cause some movement in the financial markets if it varies from forecasts by a wide margin, but it isn’t expected to cause much change in rates this month. Current forecasts are expecting to see an increase in orders of 0.1%.

The revised 1st Quarter Productivity and Costs report will be released Wednesday morning. This data measures employee output and employer costs for wages and benefits. It is considered to be a measurement of wage inflation. It is believed that the economy can grow with low inflationary pressures when productivity is high. Last month’s preliminary reading revealed a 2.2% rate, but I don’t think this piece of data will have much of an impact on the bond market or mortgage pricing unless it varies greatly from its forecasted reading of 2.5%.

The second report of the day may have a significant impact on the markets or be a non-factor depending on its result. The Institute for Supply Management will release its services index late Wednesday morning. It is expected to show a reading of 51.0, with the same principals as Monday’s manufacturing index. If this reading varies greatly from forecasts, we may see volatility in the markets and mortgage rates. However, if its results are in the general area of expectations, it will likely have no influence on the markets and mortgage pricing.

There is no relevant economic news scheduled for release Thursday, however, Friday’s sole report is arguably the single most important report that we see each month. The Labor Department will post May’s Employment data early Friday morning. This report gives us key employment readings such as the U.S. unemployment rate and the number of jobs added or lost during the month. Analysts are expecting to see the unemployment rate climb to 5.1% with approximately 52,000 jobs lost during the month. A higher than expected increase in the unemployment rate and a larger drop in payrolls would be great news for the bond market. It would probably create a sizable rally in bonds, leading to lower mortgage rates Friday. But, stronger than expected numbers would likely lead to a spike in mortgage rates.

Overall, tomorrow or Friday are likely to be the most important days of the week as they bring us the two most important reports on the agenda. If they give us weaker than expected results, we will probably close the week with lower mortgage rates than tomorrow’s opening levels. However, if we see stronger than expected readings in those two releases, I expect mortgage rates to move higher on the week.

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.

Rate Lock Advisory – Wednesday Apr. 30th

Wednesday’s bond market has opened up slightly after this morning’s economic data failed to give us any surprises. The stock markets are posting gains with the Dow up 98 points and the Nasdaq up 14 points. The bond market is currently up 3/32, which will likely keep this morning’s mortgage rates close to yesterday’s levels.

Today’s big report was the initial reading to the 1st Quarter Gross Domestic Product (GDP). It showed that the economy grew at a 0.6% annual pace. This was slightly stronger than expected, but not enough to create concern in bonds. Offsetting that reading was a key inflation reading in the data that came in lower than expected. The result was this report having little impact on today’s bond market or mortgage rates.

The second report posted this morning was the 1st Quarter Employment Cost Index (ECI), which tracks employer costs for wages and benefits. It revealed a 0.7% increase that was slightly weaker than expected. This is good news for bonds and mortgage rates, however, traders seem to be waiting for this afternoon’s events before making any adjustments to their holdings.

This week’s FOMC meeting will adjourn 2:15 PM ET this afternoon. It is expected to yield a quarter point cut to key short-term interest rates. Assuming the Fed does make that move, the post meeting statement will be watched closely for any indication of the Fed’s next move, or a lack of one. There is some debate about whether the Fed will continue to cut rates or if they will go into a holding pattern due to concern about inflation.

I suspect that the post meeting statement is going to have some verbiage about inflation that will cause concern in the bond market. Accordingly, I am shifting to a lock recommendation for immediate and short-term periods. But, if this is a false alarm, I will be shifting back to a float recommendation this afternoon. Look for an update to this report shortly after the markets have a chance to react to the FOMC meeting results.

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.

Tuesday’s bond market has opened in positive territory despite a stronger than expected economic reading. The stock markets are showing early losses with the Dow down 50 points and the Nasdaq down 9 points. The bond market is currently up 10/32, which with yesterday’s late strength should improve this morning’s mortgage rates by approximately .250 – .375 of a discount point.

The Conference Board gave us April’s Consumer Confidence Index (CCI) late this morning, revealing a stronger than expected reading of 62.3. However, an upward revision to March’s reading has actually worked favorably for bonds. The difference between forecasts and the previous March reading is extremely close to the difference between today’s reading and the revised March reading. This means that even though confidence was a little higher than thought in March, it dropped as much as it was expected to in April. The result is little impact on bond trading or mortgage rates.

Tomorrow is going to be a very interesting day as brings us the release of two important reports along with the FOMC meeting results. The first is the preliminary version of the 1st Quarter Gross Domestic Product (GDP). This is arguably the single most important report that we see on a regular basis. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best indicator of economic growth or contraction. I expect this report to cause major movement in the financial markets tomorrow and therefore the mortgage market also. Analysts are expecting to see output at an annual rate of 0.5%. A smaller increase would be ideal for mortgage rates a sit would fuel recession concerns. But, a larger increase would almost certainly cause inflation concerns in the bond market that would push mortgage rates higher tomorrow morning.

The next report of the day is the 1st Quarter Employment Cost Index (ECI), which tracks employer costs for wages and benefits. This gives us a measurement of wage-inflation. If it shows a large increase, we may see inflation concerns cause the bond market to fall and mortgage rates to rise. A smaller than expected increase would be good news for the bond market and mortgage pricing. Current forecasts are showing a rise of 0.8%.

This week’s FOMC meeting will began today but will not adjourn until tomorrow afternoon. It will likely adjourn with an announcement of another rate cut to key short term interest rates. Just how much of a reduction is open for debate. Look for another round of volatility following the 2:15 PM ET post-meeting statement.

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 onl y 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.