Daily Mortgage Rate Lock Advisory

Thursday’s bond market has opened relatively flat with no important economic data on the schedule for today. The stock markets are showing minor losses with the Dow down 15 points and the Nasdaq down 11 points. The bond market is currently nearly unchanged from yesterday’s close, but we will still see an increase in this morning’s mortgage rates of approximately .125 – .250 of a discount point due to weakness in bonds late yesterday.

Today’s only semi-relevant data was weekly unemployment claims from the Labor Department. They reported that 550,000 new claims for benefits were filed last week. This was much lower than the 580,000 that was expected, but since this data basically tracks only a week’s worth of claims it usually has a minimal impact on mortgage rates.

Tomorrow morning brings us the almighty monthly Employment report. This report gives us the 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.

Current forecasts are calling for the unemployment rate to have risen 0.1% to 9.6% 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 tomorrow morning if they vary from forecasts. If the data shows stronger readings such as fewer jobs lost in the month or a lower than expected unemployment rate, expect to see mortgage rates move higher tomorrow. Weaker than expected
readings should push mortgage rates lower.

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 – 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 – Thursday Feb. 26th

Thursday’s bond market has opened in negative territory as yesterday afternoon’s selling continues. The stock markets are showing gains with the Dow up 114 points and the Nasdaq up 15 points. The bond market is currently down 24/32, which will likely push this morning’s mortgage rates .250 of a discount point higher than yesterday’s afternoon rates. If your lender did not revise higher yesterday, then you will see an increase of approximately .500 – .625 of a discount point compared to yesterday’s morning rates.

The bond market continues to show weakness despite a couple of economic reports that somewhat underscore the economic problems we are currently facing. The Commerce Department reported that new orders for big-ticket items fell 5.2% last month, more than twice the decline that analysts were expecting. The report also revealed a significant downward revision to December’s order. What was previously announced as a 2.6% drop in orders during December is now said to be 4.6%. This indicates that the manufacturing sector is still weakening. That should be good news for the bond market and mortgage rates, but has not been able to offset the recent selling in bonds.

Today’s other two releases are much less important to the markets than the Durable Goods Orders report is but the footnotes of the weekly unemployment claims and January’s New Home Sales releases bring to light how bad some parts of the economy are. The Labor Department gave us last week’s unemployment figures, saying that 667,000 new claims for benefits were filed last week. This was much higher than what was expected and is the highest number of claims in approximately 26 years.

January’s New Home Sales figures were also posted today, revealing a 10% decline in sales of newly constructed homes. This can be considered the week’s least important data but it also brings sales down to their lowest level since records began in 1963. That further supports the theory that the housing sector has not bottomed out yet.

The first of two revisions to the 4th Quarter GDP reading is scheduled for release tomorrow morning. Analysts’ forecasts currently call for a decline of 5.4%, indicating that the economy was weaker in the last quarter of the year than initially thought. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market.

The last piece of data scheduled for release this week is the University of Michigan’s revision to their Index of Consumer Sentiment for February. Current forecasts show this index revising slightly higher than previously thought. The preliminary reading was 56.2 and is now expected to stand at 56.0, indicating that consumer sentiment was slightly weaker than previously thought. This index is important because it helps us measure consumer confidence th at translates into consumer willingness to spend.

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 – Wednesday Feb. 25th

WEDNESDAY AFTERNOON UPDATE:

The bond market has turned sour as investors again worry about the amount of new debt being sold to fund the stimulus and Fed bailout packages. The stock markets rallied off this morning’s lows during early afternoon trading but have since given back those gains to currently stand at this morning’s levels. The Dow is now down 80 points while the Nasdaq is down 16 points. The bond market has fallen from this morning’s levels to currently stand down 39/32, which will likely cause an upward revision to this afternoon’s mortgage rates of approximately .375 of a discount point from this morning’s rates.

Today’s only economic data was January’s Existing Home Sales that showed a decline in home resales of 5.3%. This was much weaker than expected and the lowest level of sales in almost 12 years. That is good news for bonds and mortgage rates, but this data is not considered to be of high importance and unfortunately has not influenced today’s rates.

The only important data scheduled for release tomorrow is January’s Durable Goods Orders data. This data gives us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. A larger drop than the 2.5% that is expected would be good news for the bond market and mortgage rates. This data is quite volatile from month-to-month, so large swings are fairly normal.

We will also get weekly unemployment claims from the Labor Department, who are expected to show that 625,000 new claims were filed last week. Since this data tracks a week’s worth of claims, it usually does not affect mortgage rates too much, but can if it varies greatly from forecasts.

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 clos ing 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 – Thursday Feb. 12th

Thursday’s bond market has opened in negative territory following the release of stronger than expected economic news. The stock markets are showing early losses with the Dow down 125 points and the Nasdaq is down 6 points. The bond market is currently down 8/32, which will likely push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point.

Today’s big economic news was January’s Retail Sales data. It showed an unexpected surprise in sales, indicating that consumers were spending much more than thought. The data revealed a 1.0% rise in sales from December’s revised decline of 3.0%. Analysts were expecting to see a drop in sales, so there was a large variance between forecasts and the actual reading. This has pushed bond prices lower this morning and contributed to today’s increase in mortgage pricing.

The Labor Department gave us weekly unemployment claim numbers this morning also. They reported that new claims f ell from a revised total of 631,000 the previous week to 623,000 last week. However, analysts were expecting to see that 610,000 new claims for benefits were filed, meaning claims were higher than expected. This can be considered good news for bonds, but the sales data is much more important to the markets than weekly unemployment claims. Therefore, it has been a much bigger influence on today’s rates than this report has been.

February’s preliminary reading to the University of Michigan Index of Consumer Sentiment will be released late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows an increase in consumer confidence, the stock markets may move higher and bond prices could fall. It is currently expected to show a reading of 60.2, which would be a decline from January’s final reading of 61.2 and indicate that consumers were less optimistic about their own financial situati ons than last month. This would be good news for bonds and mortgage rates, but after this morning’s surprise in retail level sales it will be interesting to see how accurate forecasts were.

Also worth noting is an early close in the bond market tomorrow ahead of Monday’s President’s Day Holiday. The financial markets will be closed Monday and will reopen Tuesday for normal trading hours.

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 – Wednesday Feb. 4th

Wednesday’s bond market has opened in negative territory again as investors prepare for the upcoming debt sales the Treasury announced. The stock markets are showing moderate gains with the Dow up 23 points and the Nasdaq up 25 points. The bond market is currently down 9/32, which will likely push this morning’s mortgage rates slightly higher.

Today’s only economic news was the Institute for Supply Management’s (ISM) service index. It showed a reading of 42.9 that was higher than expected, meaning the service sector was more optimistic about business conditions last month than in December. It also was a higher reading than was expected, but fortunately not enough to affect this morning’s mortgage rates.

There are two pieces of important data scheduled for release tomorrow. The first is December’s Factory Orders data and is similar to last week’s Durable Goods Orders report except this one tracks new orders for both durable and non-durable goods . Current forecasts are calling for a decline in new orders of 3.0%. A large variance from forecasts could lead to changes in mortgage pricing.

The second report of the day is Productivity and Costs data for the 4th Quarter. Since a high level of productivity is thought to allow economic growth without inflationary concerns, this data can cause enough movement in the bond market to affect mortgage rates. If it varies greatly from analysts’ forecasts of a 1.0% increase, we may see some movement in mortgage rates tomorrow.

Also on tap for tomorrow are weekly unemployment claims from the Labor Department. With January’s monthly statistics due out Friday morning, traders will be watching the data to help predict Friday’s monthly numbers. Current forecasts are calling for 592,000 new claims. The larger the number the better scenario for mortgage rates.

If I were considering financing/refinancing a home, I would…. Lock if my closing was takin g 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 – Thursday Jan. 8th

Thursday’s bond market has opened in positive territory following early weakness in stocks. The stock markets are showing losses during morning trading again that have helped keep bonds in positive ground. The Dow is currently down 86 points while the Nasdaq has lost 2 points. The bond market is currently up 6/32, which will likely improve this morning’s mortgage rates by approximately .125 of a discount point.

Today’s only economic news was weekly unemployment claims from the Labor Department. They reported this morning that 467,000 new claims for benefits were filed last week. This was much lower than the 550,000 that was expected and a decline from the previous week’s 491,000. Fortunately for the bond market and mortgage pricing, this data is not considered to be of high importance to the markets because it tracks a single week’s worth of claims. But, it does create some concern about what tomorrow’s monthly report will reveal.

The final re port of the week comes early tomorrow morning when the Labor Department will post December’s employment figures. The Employment report is considered to be one of the most important monthly releases we see. It gives us the national unemployment rate, the number of jobs added or lost during the month and average hourly earnings, which is a key measure of wage inflation. Rising unemployment, a larger than expected drop in new payrolls and a small increase or even a decline in earnings would be good news for the bond market.

Current forecasts call for a 0.3% increase in the unemployment rate, pushing it to 7.0%. Analysts are expecting to see a drop in payrolls in the neighborhood of 500,000 with earnings rising 0.2%. If we see weaker than expected results, mortgage rates should improve tomorrow. However, stronger than expected readings will likely push mortgage rates higher.

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.

Rate Lock Advisory – Wednesday Dec. 10th

Wednesday’s bond market has opened in negative territory following a strong opening in stocks. The stock markets are rebounding from yesterday’s sell-off with the Dow currently up 120 points and the Nasdaq up 26 points. The bond market is currently down 17/32, but we will likely still see an improvement in this morning’s mortgage rates of approximately .250 – .375 of a discount point due to strength in bonds late yesterday.

There is no relevant economic news scheduled for release today. October’s Goods and Services Trade Balance report will be posted early tomorrow morning along with weekly unemployment figures. The Trade Balance report gives the size of the U.S. trade deficit, but it is the week’s least important release. It is expected to show a $53.5 billion trade deficit. Unless it varies greatly from forecasts, I don’t expect it to affect mortgage pricing.

The Labor Department will post last week’s unemployment claims figures tomorrow also. They are expected to show that 525,000 new claims for benefits were filed last week. While a larger number would be good news for bonds, the truth is that this data is not very influential to bonds and mortgage rates because it covers only a week’s worth of claims. But, with no highly important data scheduled for release, if it varies much from forecasts we may see bonds react enough to slightly impact mortgage rates.

Also, there is a 10-year Treasury Note auction tomorrow that may hurt or help boost bond prices, depending on how strong of a demand there is in the sale. Results will be posted at 1:00 PM ET. If there was a strong demand for the sale, we may see bonds move higher and mortgage rates revise lower during afternoon trading. However, a lackluster interest could lead to higher mortgage pricing.

Friday morning brings us the release of a couple of important reports. The two most important are November’s Retail Sales and Producer Price Index (PPI) reports. The sales report tracks consumer spending while the PPI gives us an important measurement of inflationary pressures at the producer level of the economy. Both can lead to large swings in the markets and mortgage pricing. The third report of the day will be December’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment, but it less important than the first two.

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.

Rate Lock Advisory – Wednesday Nov. 19th

Wednesday’s bond market has opened in positive territory following favorable results from today’s CPI release. The stock markets are showing another round of early losses with the Dow down 150 points and the Nasdaq down 40 points. The bond market is currently up 17/32, which will likely improve this morning’s mortgage rates by approximately .250 of a discount point.

The Labor Department gave us today’s big news with the release of October’s Consumer Price Index (CPI). They reported that the overall reading fell 1.0% last month while the core data fell 0.1%. Both of these readings were below forecasts, indicating that inflationary pressures at the consumer level of the economy were not as bad as many had thought. This is very good news for bonds and mortgage rates.

October’s Housing Starts was also posted this morning, showing a stronger level of new starts than what forecasts were calling for. That could be considered bad news for the bond ma rket and mortgage pricing, but this data is not considered to be of high importance to the markets therefore has had little impact on today’s pricing.

The minutes to the last FOMC meeting will be released at 2:00 PM ET. These may be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over inflation and the Fed’s next move. If the Fed members were concerned about inflationary pressures, we may see the bond market move lower and mortgage rates higher tomorrow afternoon. However, if they indicate a likelihood of another rate cut in the coming months, we should see the bond market rise and mortgage rates drop during afternoon trading.

Tomorrow brings us the release of weekly unemployment figures and October’s Leading Economic Indicators (LEI). The Labor Department will post weekly unemployment claims but unless it varies greatly from the 503,000 that is expected, I don’t believe this data will affect tomorrow’s mortgage pricing.

The LEI will be posted by the Conference Board at 10:00 AM ET and is expected to show a decline of 0.6%. This means that the report is predicting economic activity to slow relatively quickly in the next three to six months. That would be good news for bonds because a slowing or weakening economy generally speaking makes bonds more attractive to investors and usually leads to lower mortgage rates.

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.

Rate Lock Advisory – Wednesday Oct. 22nd

Wednesday’s bond market has opened in positive territory as investors continue to dump stocks this morning. The stock markets showing significant losses with the Dow currently down 324 points and the Nasdaq down 36 points. The bond market is currently up 10/32, which should improve this morning’s mortgage rates by another .125 to .250 of a discount point.

There is no relevant economic data scheduled for release today, therefore the bond market is relying on stocks for direction. With stocks still falling, investors are eyeing bonds as a parking space for funds, at least temporarily. This has benefited mortgage rates this week, however, I don’t see that as a situation that will likely last long. Accordingly, I am shifting to a lock recommendation for immediate and short-term closings.

The only data scheduled for release tomorrow is weekly unemployment claims from the Labor Department. Analysts are expecting to see that 465,000 new claims were filed last week. This would be a slight increase from the previous week and would basically be good news for the bond market and mortgage rates. But, since this data tracks only a week’s worth of claims, its influence on the markets is usually limited unless it varies greatly from forecasts.

The only other data scheduled for release this week is September’s Existing Home Sales Friday morning. This report gives us an indication of housing sector strength and mortgage credit demand. I don’t see it having much of an influence on the bond market or mortgage rates, but a reading that varies greatly from analysts’ forecasts could lead to a slight change in mortgage pricing. It is expected to show a slight increase in sales from August to September.

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 pla ce 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.