Daily Mortgage Rate Lock Advisory

Daily Mortgage Rate Lock Advisory – Wednesday Dec. 17th

Rate Lock Advisory – Wednesday Dec. 17th

Wednesday’s bond market has opened up sharply as investors continue yesterday’s late rally. The stock markets are showing losses with the Dow down 114 points and the Nasdaq down 20 points. The bond market is currently up 45/32, which will likely improve this morning’s mortgage rates nearly a full percentage point in rate compared to yesterday’s morning rates.

Yesterday’s FOMC meeting yielded a .750 cut to key short-term interest rates to bring the Fed Funds rate down to a record low of .250%. That, along with the post meeting statement, led to a huge rally in bonds and stocks late yesterday. While the stock markets are giving back some of those gains, bonds have built on top of them. However, it is difficult to see where bonds may be able to improve much more before pulling back. Accordingly, I would proceed cautiously if you have not locked and interest rate yet.

There is no relevant economic news scheduled for release today, so there is no data to drive bonds prices higher than current levels. With stocks in negative ground, bonds may appear more attractive to investors, at least short-term. But, I would not be surprised to see some profit-taking in bonds to capture the gains from the recent rally. If this is the case, we may see mortgage rates revise a little higher during afternoon trading.

Tomorrow morning brings us the release of weekly unemployment figures from the Labor Department. This data is not usually of much importance to the markets because it tracks only a week’s worth of new claims. However, the second report of the day is only moderately important so if this data varies greatly from forecasts it could influence bonds enough to affect mortgage pricing. It is expected to show that 558,000 new claims for benefits were filed last week.

The week’s last piece of economic news will be posted tomorrow morning with the release of the Conference Board’s Leading Economic Indicat ors (LEI) for the month of November. This 10:00 AM release attempts to measure economic activity over the next three to six months. It is expected to show a sizable decline in activity, meaning that it predicts slower economic activity over the next several months. This probably will not have much of an impact on bond prices or affect mortgage rates unless it exceeds current forecasts of a 0.5% decline from October’s reading. If it shows a larger decline, the bond market may move slightly higher, improving mortgage rates slightly.

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 int erest of all/any other borrowers.

Tags: bond, bond market, closing, economic news, fed funds rate, fomc meeting, labor department, LEI, lock, mortgage rates, percentage point, rate, Release, stock markets, term interest, unemployment figures, yesterday

Rate Lock Advisory – Sunday Sep. 14th

Rate Lock Advisory – Sunday Sep. 14th

There are only four pieces of economic news scheduled for release this week and one of them is a highly important inflation reading. We also have another Federal Open Market Committee (FOMC) meeting, which likely will not bring a change to key short-term interest rates. There is a pretty good possibility of seeing a fair amount of volatility in the markets and likely mortgage rates the next several days.

The first report of the week is August’s Industrial Production data tomorrow morning. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is considered to be moderately important but could cause movement in mortgage rates. Analysts are currently expecting to see a 0.3% decline in production. A higher level of output could lead to higher mortgage rates, while a weaker than expected figure should help push rates slightly lower.

August’s Consumer Price Ind ex (CPI) will be released Tuesday morning at 8:30 am ET. The CPI is one of the most important reports we see each and every month. It is considered to be a key indicator of inflation at the consumer level of the economy. There are two readings in the report- the overall index and the core data reading. Current forecasts are calling for no change in the overall reading and a 0.2% rise in the core data reading. A larger increase in the core data would likely lead to higher mortgage rates Tuesday, while a smaller increase would be good news.

The FOMC meeting will adjourn at 2:15 PM Tuesday. There is little debate about a possible change to key short-term interest rates at this meeting. The overwhelming consensus is that there will be no change to rates at this meeting. However, the post-meeting statement could very well lead to volatility during afternoon trading as investors dissect it in an effort to find the Fed’s expected next move. The wild card is how the ma rkets react to the statement. If we see significant weakness in stocks, the bond market may benefit as a safe-haven from the volatility. This could lead to lower mortgage rates Tuesday afternoon and Wednesday morning.

August’s Housing Starts report will be released early Wednesday 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.

Late Thursday morning, the Conference Board will release its Leading Economic Indicators (LEI). This index attempts to measure economic activity over the next three to six months. If it estimates an increase in activity, the bond market will probably fall and mortgage rates will rise slightly. If it shows weaker than expected readings, the bond market may rally and mortgage rates should fall. Current forecasts are calling for a 0.2% decline from July’s reading.

Overall, I expect to see some pressure in bonds tomorrow as investors prepare for Tuesday’s events. Tuesday will most likely be the most important day of the week with the CPI release and the FOMC meeting. If the CPI eases inflation concerns and the Fed statement doesn’t reveal any negative surprises, we will most likely see mortgage rates move lower for 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… 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, core data, cpi, federal open market committee, fomc meeting, key indicator of inflation, LEI, manufacturing sector, mortgage rates, open market committee, overwhelming consensus, term interest, Tuesday, tuesday morning, U.S., week