Daily Mortgage Rate Lock Advisory

Daily Rate Lock Recommendation – 06/02/2008 11:47:00 AM EST

Monday’s bond market has opened in positive territory despite stronger than expected economic news. Helping boost bond prices this morning are sizable stock losses with the Dow down 132 points and the Nasdaq down 27 points. The bond market is currently up 6/32, but we will likely still see an increase in this morning’s mortgage rates of approximately .125 of a discount point due to weakness late Friday.

The first data of the week was the Institute for Supply Management’s (ISM) manufacturing index. It revealed a reading of 49.6 that was over a full point higher than forecasts. This means that manufacturers were more optimistic about business conditions than analysts had thought. That is considered negative news for bonds because strengthening manufacturing activity usually leads to strong overall economic activity and raises inflation concerns. Fortunately, traders seem to be more interested in today’s stock weakness than this data.

Tomorrow’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 a decline in orders of 0.1%.

Overall, look for Friday to be the most important day of the remaining week with the release of May’s Employment figures. This morning’s data failed to drive bond prices or mortgage rates in any direction, but Friday’s data most likely will. If we see stronger than expected readings Friday, I expect to see mortgage rates close the week higher than this morning’s levels.

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.

Tags: bond, bond prices, closing, durable goods orders, inflation concerns, institute for supply management, ism manufacturing index, negative news, refinancing a home, Release, sector report, stock losses, week, wide margin

Daily Rate Lock Recommendation – 05/16/2008 10:37:00 AM EST

Friday’s bond market has opened flat following the release of mixed economic data and new record oil prices. The stock markets are showing losses with the Dow down 39 points and the Nasdaq down 17 points. The bond market is currently up 1/32, but we should see an improvement in this morning’s mortgage rates of approximately .375 of a discount point due to strength in bonds late yesterday. Today’s data gave us mixed results. April’s Housing Starts showed stronger than expected results with an increase in starts of new homes. It was expected to reveal another decline in new home starts, indicating that the housing sector was stronger than thought. This is negative news for bonds because the weak housing sector is believed to have significantly contributed to the weakness in the overall economy. The second report of the day was May’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment. It showed a reading of 59.5 that w as lower than forecasts, meaning that consumers were less optimistic about their own financial situations than many had thought. This is good news for the bond market and mortgage rates because waning confidence usually means consumers are less apt to make large purchases in the near future. Next week is light in the number of reports scheduled for release, but it does bring us a couple of important events. The first piece of data is Monday’s release of the Leading Economic Indicators (LEI). It is a moderately important report but can influence bonds enough to lead to slight changes in mortgage rates. Look for more details on next week’s 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 ov er 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: bond, bond market, closing, financial situations, Float, housing starts, index of consumer sentiment, leading economic indicators, LEI, mortgage rates, negative news, record oil prices, refinancing a home, Release, stock markets