Daily Mortgage Rate Lock Advisory

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 – 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

Rate Lock Advisory – Monday Mar. 2nd

Monday’s bond market has opened up sharply following significant losses in stocks. The stock markets are showing early losses due to more concerns about banks and the Fed’s need to stabilize the financial system. The Dow is currently down 180 points while the Nasdaq has lost 38 points. The bond market is currently up 27/32, which will likely improve this morning’s mortgage rates by approximately .375 of a discount point.

There were two pieces of economic data released this morning and both showed stronger than expected results. The first was January’s Personal Income and Outlays data that showed personal income rose 0.4% while spending rose 0.6%. Both readings were higher than forecasts, but the income reading was well off expectations. Analysts were calling for a decline in income of 0.2%. This means that consumers had much more income to spend than thought and apparently spent more of it than they had expected. This is considered negative news for bo nds and mortgage rates.

The Institute for Supply Management (ISM) reported late this morning that their manufacturing index for February rose slightly to 35.8. Forecasts had called for a decline in the index, meaning that manufacturer sentiment was higher in the month than thought. This is also bad news for bonds because a strengthening manufacturing sector would indicate and increase in economic activity.

Despite this morning’s data, bonds have drawn interest from investors over more concerns about AIG and other financial institutions. Those concerns have pushed the Dow to its lowest level in approximately 12 years. As investors sell stocks they are moving funds into the safety of bonds. The result is a nice rally in bonds that may continue for a couple of days.

Tomorrow’s only relevant data is the Fed Beige Book during afternoon trading. This report details economic activity throughout the country by region. The Fed relies heavily on t his 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.

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 Jan. 9th

Friday’s bond market has opened down slightly despite stock weakness and news of a spike in the unemployment rate last month. The stock markets are reacting negatively to the employment data with the Dow down 109 points and the Nasdaq down 37 points. The bond market is currently down 4/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point.

The Labor Department gave us December’s Employment report this morning, showing an unemployment rate of 7.2% last month. This was higher than the 7.0% that was expected and its highest level since January 1993. They also reported that 524,000 jobs were lost during the month. That reading practically matched forecasts, however, today’s release also revised November’s job loss from 533,000 to 584,000. Overall, we saw 2.6 million jobs lost last year, which was the most since 1945.

Both of those readings are generally favorable to bonds, but traders don’t seem to be in a buying mood. The average earnings reading of the report showed a 0.3% rise compared to the 0.2% that was expected. This could be negatively influencing trading to some degree, but it is my belief that a general lack of interest in bonds is more the culprit in today’s flat trading than anything else. If not, today’s headline numbers should have fueled a bond rally.

Next week brings us the release of several important reports including December’s Retail Sales data and two key inflation readings. There is no relevant data scheduled to be posted Monday or Tuesday, but every other day of the week has important releases scheduled. 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… Lock if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Floa t 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 Sep. 26th

Friday’s bond market has opened in positive territory following a negative open in stocks and weaker than expected economic news. The markets are reacting more to news of the possible failure of the Fed bailout than today’s economic data. The stock markets are showing losses with the Dow down 32 points and the Nasdaq down 16 points. The bond market is currently up 11/32, but I don’t believe we will see much of a change in this morning’s mortgager rates.

Neither of today’s economic releases are considered to be of high importance, but both gave us results that were favorable to bonds. The first was the final revision to the 2nd Quarter Gross Domestic Product (GDP) that showed a revised rate of growth of 2.8%. This was a sizable downward revision to the previous estimate of a 3.3% annual rate and lower than analysts had expected for this revision. This means that the economy grew at a slower rate than many had thought during the 2nd quarter of the year.

The second report of the day and the final report of the week was the revised reading of the University of Michigan’s Index of Consumer Sentiment. The preliminary reading that was released earlier this month revealed a 73.1 reading, but today’s update showed a 70.3 reading. This was also lower than forecasts and hints that consumers are less optimistic about their own financial situations than thought, which usually means they are less likely to make large purchases in the near future.

Next week is packed with economic news for the markets to digest. There is relevant data scheduled for release every day of the week, beginning with August’s Personal Income and Spending data Monday morning. Look for 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… 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.

Rate Lock Advisory – Tuesday Sep. 16th

TUESDAY AFTERNOON UPDATE:

Today’s FOMC meeting has adjourned with an announcement of no change to key short-term interest rates. The post-meeting statement indicated that the Fed felt key rates were low enough to spur economic activity. The stock markets initially reacted negatively to the news since traders were expecting a rate cut, but then staged a rally that pushed the Dow up 141 points and the Nasdaq up 28 points.

The bond market did not fair so well. As expected, as soon as stocks started to rise, bonds suffered. The same funds that were moved into bonds and drove prices higher yesterday, now were hurting bonds as they were shifted back into stocks. The result was the bond market closing down 26/32 and a sizable increase to mortgage rates. I suspect that there is more room for bonds to fall if stocks continue to move higher. Therefore, holding the lock recommendations seem to be the prudent stance at this time.

Today’s on ly relevant economic data was August’s Consumer Price Index (CPI). It showed a decline in the overall reading of 0.1% and an increase of 0.2% in the core data reading. Both of these readings matched forecasts, therefore, they had little impact on the bond market or mortgage rates.

August’s Housing Starts report is the only relevant data being posted tomorrow morning. This report will probably not have much of an impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand, but is usually considered to be of low importance to the financial markets. Tomorrow’s report is expected to show a drop in new housing starts from July’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… 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.