Daily Mortgage Rate Lock Advisory

Wednesday’s bond market has opened in negative territory following early stock strength and concerns over today’s FOMC meeting adjournment. The stock markets are showing strong gains with the Dow up 130 points and the Nasdaq up 32 points. The bond market is currently down 12/32, which should push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point compared to yesterday’s morning rates.

This morning’s only relevant economic data was June’s Trade Balance report that revealed a $27.0 billion deficit. This was smaller than expected, but this data is not considered to be highly important to the markets so its impact on this morning’s trading and mortgage rates has been minimal.

It will likely be an active afternoon for the markets and mortgage rates. The results of today’s 10-year Treasury Note auction will be posted at 1:00 PM ET and this week’s
FOMC meeting will adjourn at 2:15 PM ET. Either of these events can lead to afternoon swings in the financial markets and mortgage rates, so expect to see some afternoon revisions today.

This report will be updated shortly after the markets have an opportunity to react to the FOMC statement, but I am holding my cautious approach towards rates into this afternoon’s events. I would not be surprised to see upward revisions to rates later today.

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.

Wednesdays bond market has opened in negative territory as yesterday’s selling carries into today. The stock markets are showing losses with the Dow down 76 points and the Nasdaq down 20 points. The bond market is currently down 5/32, which with yesterday’s weakness should push this morning’s mortgage rates higher by approximately .375 of a discount point.

The Commerce Department said this morning that June’s Factory Orders data rose 0.4%. This was a little stronger than revised forecasts had called for, but has had little impact on today’s trading. The data is not considered to be highly important and traders are looking towards Friday’s release for major news on the economy.
There is no relevant monthly or quarterly economic news scheduled for release tomorrow. The Labor Department will give us last week’s unemployment figures early tomorrow morning, but this data is considered to be of low importance to the markets. It will not impact bond trading or mortgage rates unless we see a significant variance from the 580,000 new claims for benefits that analysts are expecting to see.

The most important piece of data this week and arguably each month is the monthly Employment report that will be posted Friday morning. This report gives usthe U.S. unemployment rate, number of jobs added or lost during the month and the average hourly earnings reading for July. The ideal situation for the bond market is rising unemployment, a sizable loss of jobs and little change in earnings. This report is considered to be one of the single most important releases that we see each month, therefore, can heavily influence the markets and mortgage rates.  While the GDP is arguably the single most important report in general, it is posted quarterly rather than monthly like the Employment report. Friday’s report is expected to show that the unemployment rate rose to 9.6% last month while approximately 328,000 jobs were lost. The unemployment rate probably will not be much of a factor unless it moved much more than the 0.1% that is expected. However, due to the importance of these readings, we will most likely see quite a bit of volatility in the markets and mortgage pricing Friday morning if they vary 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…

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 – Wednesday Apr. 22nd

Wednesday’s bond market has opened in negative territory with no relevant economic news and early stock gains making bonds less attractive. The Dow is currently up 60 points while the Nasdaq has gained 28 points. The bond market is currently down 13/32, which should equate to an increase in this morning’s mortgage rates of approximately .250 of a discount point.

There is no relevant data scheduled for release again today, so look for any movement in bond prices and mortgage rates to come as a result of a swing in stock prices. Yesterday’s afternoon weakness in bonds was not a complete surprise and we may have more of it today. Accordingly, this may be a good time to lock a rate if closing in the immediate future.

We do have some relevant data scheduled for release tomorrow. The National Association of Realtors will post March’s Existing Homes Sales early tomorrow morning. They are expected to show a drop from February’s sales, but this data is not considered highly important. It can however, influence trading and lead to slight changes in mortgage rates if it varies greatly from forecasts.

Also tomorrow is the weekly release of unemployment figures from the Labor Department. They are expected to show that 639,000 new claims for benefits were filed last week. This would be an increase from the previous week’s total. The higher the number of claims, the better the news for bonds and mortgage rates.

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.
©Mortgage Commentary 2009

Rate Lock Advisory – Tuesday Mar. 24th

Tuesday’s bond market has opened in negative territory with no relevant data scheduled for release today. The stock markets are showing minor losses compared to yesterday’s significant rally with the Dow down 42 points and the Nasdaq down 14 points. The bond market is currently down 9/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point.

Today’s selling does not completely surprise me. After the size of last week’s rally, there is still room for profit taking so that traders can capture the gains from that rally. They also need to prepare for upcoming economic reports, beginning with next week’s highly important data. With this being a fairly uneventful week in terms of expected announcements and the level of importance of the economic news on tap, traders are taking the opportunity to reposition their portfolios and prepare for the next few weeks.

There are two reports scheduled for release tomorrow. The first is the week’s most important and comes from the Commerce Department. They will release February’s Durable Goods Orders early tomorrow morning. This report gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years. This data is known to be volatile from month to month but is still considered to be of high importance. Analysts are expecting it to show a decline in new orders of approximately 2.4%. A smaller decline would be considered a negative for bonds and could lead to higher mortgage rates tomorrow morning.

The second of the day will be released at 10:00 AM ET. February’s New Home Sales report is expected to show a small decline in sales of newly constructed homes. But with tomorrow’s report covering only approximately 15% of all home sales, its result will likely have less of an impact on mortgage rates than yesterday’s Existing Home Sa les report did.

Thursday and Friday bring us the release of a couple of moderately important reports. Thursday’s final reading to the 4th Quarter GDP will likely not influence trading or mortgage rates much. Friday’s Personal Income and Outlays data, along with the revised reading to this month’s University of Michigan Index of Consumer Sentiment are a little more important to rates than Thursday’s report is, but both are generally considered to be only moderately important. In other words, it will likely take a large variance from forecasts for them cause a noticeable change in mortgage rates.

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 fin ancing 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. 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 – 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 – Tuesday Mar. 10th

Tuesday’s bond market has opened in negative territory with stocks rallying behind favorable earnings news from Citigroup. The Dow is currently up 254 points while the Nasdaq has gained 60 points. The bond market is currently down 24/32, but I am expecting to see an increase in this morning’s mortgage rates of approximately .125 – .250 of a discount point.

The news that banking giant Citigroup was profitable the first two months of the year has led to rally in many sectors that have been hit hard due to economic and stability news. Whether or not this rally is the beginning reversal for stocks or if this is just a good day in a bad quarter remains to be seen. It will be interesting to see if the major indexes can hold this morning’s gains during afternoon trading and over the next few days. If not, look for more selling in stocks that could benefit bonds and mortgage rates. However, if they continue to rise, we may see pressure in bonds that lead to high er mortgage rates in the near future.

There is no relevant economic data scheduled for release again today. The rest of the week brings us the release of three economic reports for the bond and mortgage markets to digest along with 10-year Treasury Note and 30 year Bond auctions. The first will be held tomorrow with results posted at 1:00 PM. 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.

The most important of the three reports will be posted Thursday morning when February’s Retail Sales data is released. This report is extremely 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 a pproximately 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 Thursday 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… 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 – Monday Mar. 9th

Monday’s bond market has opened in negative territory following early stock gains. However, stocks have given back those gains to currently stand close to Friday’s closing levels. The Dow is currently up 4 points while the Nasdaq is nearly unchanged. The bond market is currently down 9/32, which will likely push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point.

There is no relevant economic data scheduled for release today. The rest of the week brings us the release of three economic releases for the bond and mortgage markets to digest along with 10-year Treasury Note and 30 year Bond auctions. All of the data will be posted the latter part of the week. Only one of the three reports is considered to be of high importance to the markets, but this does not mean that we can expect to see a quiet week in mortgage rates. We could very well see the most movement in rates the latter part of the week, but rates are likely to mo ve several days this week.

The most important of the three reports will be posted Thursday morning when February’s Retail Sales data is released. This report is extremely 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 Thursday morning.

Overall, it will likely be another active week in the mortgage market. Thursday will probably be the most important day of the week with the Retail Sales report due. The 10-year Treasury Note auction is scheduled for Wednesday while the 30-year bond sale will be held Thursday. Results of bot h sales will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading, however, weak demand could lead to selling and an increase to mortgage rates. But I am expecting to see the most movement in rates the latter part of the week regardless of the auction 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.
©Mortgage Commentary 2009

Rate Lock Advisory – Wednesday Mar. 4th

Wednesday’s bond market has opened well into negative territory following a strong opening in stocks. The stock markets are rallying with the Dow up 150 points and the Nasdaq up 32 points. The bond market is currently down 28/32, which will likely push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point.

There were no important economic reports scheduled for release this morning. The Fed will release its Beige Book at 2:00 PM ET today. This report details economic activity throughout the country by region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading tomorrow. It probably will not cause a major sell off in the stock or bond markets, but could cause enough movement in bond prices to possibly improve or worsen mortgage rates slightly if it reveals any significant surprises.

There are two important reports scheduled for release tomorrow m orning. The first is the revised Productivity index for the 4th Quarter of last year. The preliminary reading posted last month showed a 3.2% increase in worker output. Analysts are expecting to see a sizable downward revision to the initial reading. It is expected to be cut to a 1.6% increase in output, meaning workers were not as productive as previously thought during the quarter. The Unit Labor Costs reading is expected to be revised higher to 3.4%. Employee productivity and costs are watched fairy closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns, while increases in employee costs do raise inflation fears.

January’s Factory Orders will be posted late tomorrow morning, which will give us a measurement of manufacturing sector strength. This data is similar to last week’s Durable Goods, except this report covers orders for both durable and non-durable goods. Current forecasts are calling for a drop in new orders of approximately 2.1%. A larger than expected drop would be good news for the bond market and could lead to an improvement in mortgage rates.

We also will get weekly unemployment numbers from the Labor Department, but I am not expecting them to heavily influence bond trading or mortgage rates.

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.