Daily Mortgage Rate Lock Advisory

WEDNESDAY AFTERNOON UPDATE:

This week’s FOMC meeting has adjourned with no change to key short-term interest rates. This was widely expected by market participants. The post-meeting statement really didn’t give us any new insight to the Fed’s next move. It did renew the same thoughts previously mentioned- that the economy is leveling off but to expect weak economic conditions for the immediate future. They also indicated that inflation is not an immediate concern to the economy.

The lack of a change to rates had no impact on trading as it was expected. The portion of the statement that indicated the spiraling economy is stabilizing can be considered somewhat negative for the bond market. However, the lack of concern about inflationary pressures offset any concerns that may have arisen from the reminder than the economic downturn is slowing.

Today’s 10-year Treasury Note auction has caused some stress in bonds during afternoon trading though. The sale was met with an average demand at best. The results were far from the worst we have seen but also nowhere near the recent levels of interest. This led to bond prices falling immediately after the 1:00 PM ET announcement and the FOMC meeting has done nothing to push them higher. Overall, I am expecting to see a small upward revision to mortgage rates this afternoon. If your lender does not revise higher today, it will be built into tomorrow’s pricing. Some lenders may opt to wait for tomorrow morning’s key economic data to be posted before reflecting this change. If that is the case, keep in mind you already have a slight increase waiting from this afternoon’s events.

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 was minimal.

Tomorrow morning’s sole monthly report is July’s Retail Sales data. This data is very important to the financial markets and mortgage rates because it helps us measure consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any data related to it can cause a fair amount of movement in the markets. A smaller than expected increase would indicate that consumers are spending less than previously thought, potentially slowing the economic recovery. This is good news for the bond market and mortgage rates as it eases inflation concerns and makes long-term securities such as mortgage-related bonds more attractive to investors. Current forecasts are calling for an increase of 0.7%.

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 – Thursday Mar. 5th

Thursday’s bond market has opened strong following early stock weakness. The major stock indexes are showing significant losses after yesterday’s rally. The Dow is currently down 230 points while the Nasdaq is down 42 points. The bond market is currently up 34/32, but we will likely see an improvement in this morning’s mortgage rates of only .125 – .250 of a discount point.

This morning’s economic news gave us results that were not favorable to bonds and mortgage rates. The Productivity revision revealed a much lower level of worker output than was expected. Today’s report showed a decline in output of 0.4% compared to the increase of 1.0% that was forecasted and the 3.2% gain that was estimated last month. It also showed a significant upward revision to the Unit Labor Costs portion of the report that raises wage inflation concerns. Even though this report is of medium importance to the markets, the revised readings are somewhat surprising.

The second report of the morning wasn’t much better either. The Commerce Department reported that Factory Orders fell 1.9% in January. This was stronger than analysts’ revised forecasts of a 3.5% decline, but today’s reports also revised December’s orders lower by 1.0%. That seemed to have offset the higher than expected reading, but this report is also considered to be of medium importance so its impact has been relatively minimal.

The Labor Department reported that 639,000 new claims for benefits were filed last week. This was lower than expected and a decline from the previous week’s total.

Tomorrow morning brings us February’s Employment report at 8:30 AM ET tomorrow. Some of the important portions of the report will give us the unemployment rate, number of new jobs added or lost and the average hourly earnings reading. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a large drop in pa yrolls and little or no increase in earnings. Current forecasts are calling for 0.3% increase in the unemployment rate to 7.9% and approximately 650,000 jobs lost during the month.

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 – Wednesday Jan. 28th

WEDNESDAY AFTERNOON UPDATE:

Today’s FOMC meeting adjourned with no change to key short-term interest rates, keeping the benchmark Fed Funds Rate near 0%. The stock markets rallied following the adjournment, pushing the Dow up 200 points and the Nasdaq higher by 53 points on the day. The bond market soured though, driving bond prices lower that pushed yields and mortgage rates higher. Overall, we can expect to see an increase in tomorrow’s mortgage rates of approximately .375 of a discount point unless the morning’s data offsets those losses or pushes them higher.

The post meeting statement did give us some insight into what actions the Fed may take to help boost economic activity since this rate can’t be lowered any further. They indicated that they were ready to buy longer-term government securities such as the 10-year Treasury Note and 30 year Bond if they felt that it would generate lending. This is actually good news as it creates another buyer for all the debt that could some to market to pay for the stimulus package currently being considered. Unfortunately, the statement was not very definitive, more or less saying that it is an option available not a commitment to do so.

The statement also hinted at the Fed’s forecast for the economy, saying that significant risks still remain but that a ?gradual recovery? could begin late this year. In other words they expect the economy to continue to slow for most of the year before slowly rebounding. That is actually fairly favorable news for bonds, but traders apparently were disappointed by the lack of solid details of what the Fed will do, particularly regarding the possibility or likelihood of buying government securities. The result was a weak afternoon for bonds and a likely upward revision to mortgage pricing.

Tomorrow morning brings us the release of December’s Durable Goods Orders. This data helps us measure manufacturing strength by tracking new orders at U.S. factories for products that are expected to last three or more years. The data often is quite volatile from month to month, but is currently expected to show a decline in orders of 2.0%. A larger than expected drop would be good news for bonds and mortgage rates.

December’s New Home Sales report, the sister release to Monday’s Existing Home Sales, will be posted late tomorrow morning. It is expected to show another decline in sales of new homes, but is not important enough to heavily influence mortgage pricing.

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 guaran teed to be in the best interest of all/any other borrowers.

Rate Lock Advisory – Tuesday Jan. 27th

Tuesday’s bond market has opened in positive territory after this morning’s economic news failed to give any significant surprises. The stock markets are showing gains during early trading with the Dow up 53 points and the Nasdaq up 15 points. The bond market is currently up 6/32, which will likely keep this morning’s rates near yesterday’s levels.

January’s Consumer Confidence Index (CCI) was posted late this morning, revealing a reading of 37.7. This was a lower than forecasts of a 39.0 reading, but offsetting that favorable news was an upward revision of 0.6% to December’s confidence reading. This means that consumers were more confident in their own financial situations than previously thought in December, but that sentiment has dropped in January. Lower levels of confidence are considered good news for bonds because it usually means consumers are less apt to make large purchases in the immediate future.

There is no factual economic data sc heduled for release tomorrow, but we will get the results of this year’s first FOMC meeting. It will begin tomorrow and adjourn at 2:15 PM ET Wednesday. It is expected to yield no change to short-term interest rate, but as is often the case, traders will be looking for any indication of the Fed’s next move. However, I am not expecting this meeting to have a major impact on the markets or mortgage rates because the Fed can’t lower key rates much more. There is little chance of indicating a possible rate hike in the near future, so I don’t believe that this meeting will have the influence they usually do.

The rest of the week is pretty busy with five relevant reports scheduled to be released over Thursday and Friday. There are two on Thursday’s agenda while the most important one comes Friday along with two other moderately important reports. I am expecting to see additional movement in mortgage rates over the next couple of days, so please maintain contact with your mortgage professional.

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 Dec. 3rd

Wednesday’s bond market has opened in negative territory despite the release of favorable economic news. The stock markets are in positive ground with the Dow up 87 points and the Nasdaq up 25 points. The bond market is currently down 17/32, which will likely push this morning’s mortgage pricing higher by approximately .250 of a discount point.

The revised reading to the 3rd Quarter Productivity report was posted this morning, showing an upward revision in productivity. What was previously estimated as a 1.1% rate was expected to be lowered to 0.9%. However, today’s release revealed a 1.3% annual rate, which means that workers were more productive than previously thought. That is considered good news for bonds and mortgage rates.

The Fed Beige Book will be released at 2:00 PM ET this afternoon. This report, which is named after the color of its cover, details economic conditions by region. It is relied on heavily during the FOMC meetings when determining monetary policy, so it results can influence bond trading and mortgage rates if it shows any significant surprises. I am expecting it to show significant signs of economic weakness and easing inflationary pressures. But, I believe the market has this news already built into it so the news may not lead to improvements in rates this afternoon.

Tomorrow’s only monthly report is October’s Factory Orders. This report is similar to last week’s Durable Goods Orders release except that this one includes orders for both durable and non-durable goods. This data usually isn’t a major influence on bond trading, but we may see it cause some movement in mortgage rates if it varies greatly from forecasts. Analysts are expecting to see a drop in orders of approximately 4.5%.

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.