Daily Mortgage Rate Lock Advisory

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.

Friday’s bond market has opened in positive territory as investors digest the week’s events. The stock markets are showing gains with the Dow up 50 points and the Nasdaq up 22 points. The bond market is currently up 4/32, but we will still see an increase in this morning’s mortgage rates due to weakness late yesterday.

There is no relevant economic data scheduled for release today. This makes it likely that bonds will be influenced mostly by changes in the stock markets today. As long as the major stock indexes remain calm, I would expect bonds and mortgage rates to follow suit. If the stock markets give back this morning’s gains, bonds may react favorably as the day goes on. However, afternoon weakness seems to be routine lately so we should go into the weekend with a cautious approach.

Next week is fairly active in terms of economic releases. There are several scheduled for release
that may influence mortgage pricing, but we also have an FOMC meeting on the calendar next week. In addition to those items, there is another round of Treasury auctions on the agenda that may also affect bond trading and mortgage rates.
None of the economic data or relevant events take place on Monday, so look for it to be a day of preparation for the week’s events. Unless something positive happens or is announced over the
weekend, there is little to lead us to believe Monday will be a strong day for bonds. But look for more details on next week’s data and relevant 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.

Thursday’s bond market has opened in negative territory as yesterday’s afternoon weakness continues into this morning’s trading. The stock markets are showing gains with the Dow up 82 points and the Nasdaq up 2 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 over yesterday’s morning rates.

The Labor Department reported early this morning that 608,000 new claims for unemployment benefits were filed last week. This was slightly higher than what analysts had expected, but not enough of a difference to have much influence on mortgage pricing.

The Conference Board gave us today’s second piece of news with the release of its Leading Economic Indicators (LEI) for May. It revealed a 1.2% increase that exceeded forecasts and points towards a sharp increase in economic activity over the next three to six months. This is bad news for bonds because strengthening economic activity makes bonds less appealing to investors and leads to higher mortgage rates.

Yesterday’s morning rally in bonds was short-lived as trading turned sour as the day went on. What looked like a potentially wonderful day for mortgage shoppers ended up being a bad day. A combination of a couple of factors led to the selling, including a weakening dollar that makes U.S. securities less valuable to international investors. The negative tone has carried into this morning’s trading and with no important economic data this afternoon or tomorrow to stop the selling, we may see mortgage rates revise higher this afternoon and possibly tomorrow.

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…

Rate Lock Advisory – Friday Mar. 20th

Friday’s bond market has opened in negative territory this morning with no relevant economic news to drive the markets. The stock markets are relatively flat with the Dow up a few points and the Nasdaq down the same. The bond market is currently down 6/32, which will likely push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point over yesterday’s morning rates.

As expected, we saw some pressure in bonds late yesterday and this morning. This by no means is a point of concern for me. The selling or balancing of portfolios is common after such a drastic move in such a short period of time. I am still quite optimistic that mortgage rates still have more room to improve in the near future.

There are no relevant economic reports being released today. Fed Chairman Bernanke is giving a speech at noon today to a bankers’ conference in Phoenix, Arizona. It is not considered to be an important speech that will likely affect the markets or mortgage rates. Whenever he speaks publicly there is always a possibility of the markets reacting, but the likelihood of seeing any reaction that will change mortgage rates is minimal in my opinion.

Next week is fairly busy with economic releases, but none are considered to be of extreme importance. There are reports scheduled for several days of the week, including Monday’s posting of February’s Existing Home Sales data. Look for more details on next week’s events in Sunday evening’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 b est interest of all/any other borrowers.
©Mortgage Commentary 2009

Rate Lock Advisory – Thursday Mar. 19th

Thursday’s bond market has opened in positive territory this morning as yesterday’s afternoon news has continued into this morning’s trading. The stock markets are not boding so well with the Dow down 37 points and the Nasdaq down 3 points. The bond market is currently up 7/32, which will likely keep mortgage rates near yesterday’s afternoon pricing. Overall, this morning’s rates should be approximately .625 of a discount point lower than yesterday’s morning rates. This equates to an improvement of a little more than .125 of a percent in rate.

Today’s economic data did not heavily influence trading or mortgage rates. The Labor Department gave us weekly unemployment claim figures, saying that 646,000 new claims for benefits were filed last week. This was a little lower than expected, but offsetting that number was news that the number of continuing claims reached a record number. Generally speaking, this data is not considered to be of high importance to the markets, so its impact on rates is usually limited.

The second piece of news was February’s Leading Economic Indicators (LEI). The Conference Board reported that the index fell 0.4% last month, which was stronger than the 0.6% decline that was expected. However, they also revised January’s reading weaker by 0.3%, effectively making this morning’s results a non-factor in the markets. But it does indicate that economic conditions are expected to weaken moderately over the next several months and that is favorable for bonds.

There is no relevant economic news scheduled for release tomorrow. I would not be surprised to see the bond market give back a little of this week’s gains as the markets stabilize. This could lead to a small increase in mortgage rates if true. Therefore, we may want to consider locking an interest rate if closing in the immediate future. The longer-term out look is still quite favorable for mortgage shoppers in my opinion t hough.

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.
©Mortgage Commentary 2009

Rate Lock Advisory – Wednesday Mar. 18th

WEDNESDAY AFTERNOON UPDATE:

This week’s FOMC meeting has adjourned with some extremely favorable news regarding the Fed’s investment in Treasury securities and mortgage-related bonds. As expected, there was no change made to key short-term interest rates but the post-meeting statement did mention that economic conditions were worse now than at the time of their last meeting in January. They again mentioned concerns about deflation, meaning inflation is not a threat in their minds.

The big news was the size of the investment that the Fed is going to be making in mortgage-related bonds and securities. In a direct effort to push different interest rates lower, including corporate lending and residential mortgage rates, the central bank will be buying up to $300 billion in longer-term bonds over the next six months. They also said that they plan to purchase $750 billion in mortgage backed securities so free up more capital for mortgage lending. T his will likely give the housing and mortgage sectors a much needed boost.

The effect this news had on today’s trading was extremely positive for mortgage shoppers. The stock markets have rebounded with the Dow up approximately 50 points and the Nasdaq up 25 points. Both indexes were well in negative territory this morning. The bond market has had an even better reaction to the news. It is currently up a whopping 4 7/32 (135/32) to drive its yield lower by .47%. That is a huge swing and should equate to a very significant improvement to mortgage rates shortly.

Earlier today, the Labor Department gave us the week’s most important economic data with the release of February’s Consumer Price Index (CPI). It showed a 0.4% rise in the overall reading and a 0.2% increase in the core data reading. Both readings were slightly stronger than expected, indicating prices at the consumer level of the economy were higher than thought. While that is bad news fo r bonds and mortgage rates because inflation erodes the value of a bond’s future fixed interest payments, the market downplayed the data in this morning’s trading, looking forward to this afternoon’s FOMC results.

The Conference Board will post its Leading Economic Indicators (LEI) for February late tomorrow morning, but I suspect that today’s rally and news will carry into tomorrow’s morning trading and influence rates more than this report will. The LEI attempts to measure economic activity over the next three to six months. Current forecasts are calling for a 0.6% decline, indicating that economic activity will likely slow in the coming weeks. That would be good news for the bond market and mortgage rates generally speaking, but today’s news will probably dominate trading tomorrow regardless of the results of the LEI.

If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… Float if my clos ing 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 – Wednesday Mar. 18th

Wednesday’s bond market has opened in positive territory following early stock losses and despite stronger than expected inflation news. The stock markets are posting sizable losses with the Dow down 128 points and the Nasdaq down 11 points. The bond market is currently up 16/32, but we will likely see little change in this morning’s mortgage rates as the markets await the Fed’s words later this afternoon.

The Labor Department gave us today’s important data with the release of February’s Consumer Price Index (CPI). It showed a 0.4% rise in the overall reading and a 0.2% increase in the core data reading. Both readings were slightly stronger than expected, indicating prices at the consumer level of the economy were higher than thought. While that is bad news for bonds and mortgage rates because inflation erodes the value of a bond’s future fixed interest payments, the market seems to have downplayed the data in this morning’s trading.

This week’ s FOMC meeting will adjourn at 2:00 PM ET today. There is not likely to be any change in short-term interest rates, but the markets will be looking for any indication if the Fed will be buying bonds as part of its effort to keep the markets liquid. If the Fed does start buying the debt, it should ease investor concerns about the amount of the debt that has been sold to fund the economic recovery and bailout programs. This would also likely prevent China, who made concerning comments last week, from selling some of their massive holdings in U.S. securities. The Fed move would also likely help keep mortgage rates low, possibly even driving them lower than current levels.

If the post-meeting statement indicates that the Fed is ready to start buying bonds, we could see an afternoon rally that may revise mortgage pricing lower this afternoon. However, any hint that the move may be delayed or is not going to happen would likely lead to selling in bonds and higher m ortgage rates later today.

Look for an update to this report shortly after the markets have an opportunity to react to the 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 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 – 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 Mar. 12th

Thursday’s bond market has opened flat despite early stock gains and stronger than expected economic news. The Dow is currently up 99 points while the Nasdaq is up 14 points. The bond market is currently up 2/32, but we will likely see an improvement in this morning’s mortgage rates of approximately .375 of a discount point due to strength in bonds late yesterday.

The Commerce Department posted February’s Retail Sales data this morning, revealing a 0.1% decline in sales. This was stronger than the 0.4% that was expected. Today’s release also revised January’s sales figures higher 0.8%, meaning that sales at the retail level of the economy were stronger than expected the past two months. That is considered to be bad news for the bond market and mortgage rates, but the market seems to be shrugging off the data.

Also this morning, the Labor Department announced that 654,000 new claims for benefits were filed last week. This was a little higher than expected, but this weekly report usually does not carry much influence on the markets and mortgage rates unless it varies greatly from forecasts.

The 30-year Bond auction is being held today. Results will be posted at 1:00 PM, as yesterday’s 10-year Note sale. Yesterday’s sale was met with a strong demand from investors, which helped rally bonds during afternoon trading. The 10-year Note is more relevant to mortgage rates than the 30-year Bond, but a weak or strong sale today can lead to selling to selling or buying of bonds on a broader scale. So, if we get another strong interest in the sale, we may see bonds rally again this afternoon.

There are two economic reports scheduled to be posted tomorrow morning. The first is the release of January’s Goods and Services Trade Balance. This report gives us the size of the U.S. trade deficit. It is the week’s least important piece of news and likely will not influence mortgage rates much. It is expecte d to show a trade deficit of $38.2 billion.

The second report of the morning is the University of Michigan’s Index of Consumer Sentiment for March at 9:45 AM. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates. If the index rises, indicating that confidence is rising and spending will likely rise, we may see mortgage rates move higher late tomorrow morning. It is expected to show a reading of 56.3.

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.
©Mortgage Commentary 2009

Rate Lock Advisory – Wednesday Mar. 11th

Wednesday’s bond market has opened down slightly with no relevant economic news and only small gains in stocks. The Dow is currently up 20 points while the Nasdaq has gained 6 points. The bond market is currently down 4/32, which should keep this morning’s mortgage near yesterday’s levels.

There is no relevant economic data scheduled for release again today. Tomorrow brings us the first relevant data of the week. The 10-year Note sale is being held today while the 30-year Bond auction will be done tomorrow. Results will be posted at 1:00 PM each day. It is fairly common to see weakness in bonds right before the sales as trading firms prepare for them. If the auctions are met with a strong demand, that weakness is usually erased almost immediately. Therefore, is today’s sale is met with a strong demand, we may see movement in bonds and rates this afternoon.

February’s Retail Sales data will be released tomorrow morning. This report is extreme ly important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the financial markets. This month’s report is expected to show a decline in sales of approximately 0.4%. If it reveals a larger decline in sales, the bond market should rise and mortgage rates will likely fall. If it reveals an increase, I expect to see bond prices fall and mortgage rates rise tomorrow morning.

We also will get weekly unemployment claims from the Labor Department tomorrow morning. They are expected to say that 640,000 new claims for benefits were filed last week. This would be little change from the previous week’s total, but this data is not nearly important as the sales data is and will likely have little impact on the markets or rates.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 d ays… 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