Daily Mortgage Rate Lock Advisory

Daily Rate Lock Recommendation – 06/25/2008 3:34:00 PM EST

WEDNESDAY AFTERNOON UPDATE: This week’s FOMC meeting has adjourned with an announcement that no change was made to key short-term interest rates, which was the first time in the past nine months. This was widely expected, but the post-meeting statement did indicate concerns about inflation. This has helped push bond prices lower than pre-adjournment levels. However, they have not moved enough as of yet to likely cause afternoon revisions to mortgage rates. I am expecting most lenders to reflect these changes in tomorrow’s rates. The stock markets have improved from this morning’s levels with the Dow 92 points and the Nasdaq up 48 points. The bond market is currently down 12/32. If bond prices fall much further, we may see upward revisions to mortgage rates by the end of business. If they remain near current levels, the increase will probably be reflected in tomorrow’s pricing. The Commerce Department gave us May’s Durable Goods Orders this morning, announcing no change in orders for big-ticket items between April and May. This was expected and therefore had little impact on the bond markets or mortgage rates. Also posted this morning was May’s New Home Sales report. It showed a decline in sales of newly constructed homes between April and May, but to a level that was expected. With this data being considered of low importance and the fact that it came very close to analysts’ forecasts, this data has been a non-factor in this morning’s trading. The only relevant economic data scheduled for release tomorrow is the final reading to the1st Quarter GDP and weekly unemployment claims. The GDP data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Last month’s first revision showed a 0.9% rate of growth, but analysts are expecting to see an upward revision to 1.0%. 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.

Tags: big ticket items, bond, bond prices, closing, durable goods orders, fomc meeting, gdp data, lock, quarter gdp, release tomorrow, tomorrow, upward revision, upward revisions

Daily Rate Lock Recommendation – 06/12/2008 10:39:00 AM EST

Thursday’s bond market has opened down sharply following early stock gains and stronger than expected economic data. The stock markets are rallying during early trading with the Dow up 141 points and the Nasdaq up 24 points. The bond market is currently down 20/32, which will push this morning’s mortgage rates higher by approximately .250 – .375 of a discount point. Limiting this morning’s increase in rates was a strong showing during afternoon trading yesterday. However, this morning’s losses erased those gains and then some. Helping contribute to yesterday’s late rally was the afternoon release of the Fed Beige Book. It showed overall weak economic growth in most regions of the country. It noted that food and energy prices were rising quickly and could help prevent growth in the economy. The downside of that is rising fuel prices can also lead to inflation in other parts of the economy and make it to the consumer level. But, this news, coupled with an eventual loss of over 200 points in the Dow, led to a rally in mortgage-related bonds. Unfortunately, the gains have been wiped out this morning. This morning’s big news was the release of May’s Retail Sales data that showed a 1.0% rise in sales at retail establishments. This was nearly twice the increase that was forecasted and shows that spending was much stronger than expected during the month. The footnote to this reading though is that this was the month that most of the economic stimulus checks went out and their impact is being debated. But another number in the report that also was negative for bonds was an upward revision to April’s sales. They were previously announced as a decline of 0.2%, but today’s report said they actually rose 0.4%. That indicates that sales were stronger than many had thought over the past two months. Also worth noting was a larger than expected number of new unemployment claims filed last week. The Labor Department reported that 384,000 new claims for benefits were filed last week, exceeding forecasts and getting very close to the important benchmark of 400,000. That level is another recessionary sign and could lead to further concerns about the economy that may benefit bonds. There are two reports scheduled for release tomorrow. The first and more important of the two is May’s Consumer Price Index (CPI) that measures inflationary pressures at the consumer level of the economy. This is one of the most important reports we see each month. There are two readings of this index, the overall and the core data. The core data is considered to be the more important of the two because it excludes more volatile food and energy prices. A large increase could raise fear in the bond market that inflation is a threat. This would not be good news for bond prices or mortgage rates since inflation erodes the value of a bond’s future fixed interest payments. Rising inflation causes investors to sell bonds, driving prices lower and mortgage rates higher. Analysts are expecting to see an increase of 0.5% in the overall index and a 0.2% rise in the core data. The last report of the week is June’s preliminary reading to the University of Michigan Index of Consumer Sentiment. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. It is expected to show a reading of 59.5. A larger then expected decline in consumer confidence would be considered good news for bonds, however, the CPI report is much more likely to have a bigger impact on the markets than this one will. 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.

Tags: bond, bond market, economic stimulus, eventual loss, fed beige book, lock, report, retail establishments, retail sales data, stock gains, stock markets, upward revision

Daily Rate Lock Recommendation – 06/04/2008 12:11:00 PM EST

Wednesday’s bond market has opened in negative territory following stock gains during morning trading. The stock markets are in positive territory with the Dow up 60 points and the Nasdaq up 30 points. The bond market is currently down 7/32, but we likely will still see an improvement in this morning’s mortgage rates due to strength in bonds during afternoon trading yesterday.

The Labor Department said that this morning that the 1st Quarter Productivity and Costs reading actually rose at a 2.6% annual pace. This was slightly more than was expected, but is good news for bonds and mortgage rates. The preliminary reading showed a 2.2% pace and forecasts were calling for an upward revision to 2.5%. This means that workers were a little more productive during the quarter than what was thought. That is considered to be favorable to bonds and mortgage rates because strong levels of productivity are believed to allow the economy to grow without inflation concerns .

The second report of the day was the Institute for Supply Management’s Services Index late this morning. It revealed a reading of 51.7 that was higher than expected, but lower than last month’s 52.0 reading. Accordingly, this data has little impact on bond trading or mortgage rates this morning.

There is no relevant data scheduled for release tomorrow except for weekly unemployment figures from the Labor Department. They are expected to say that 372,000 new claims for unemployment benefits were filed last week, matching the previous week’s total. Generally speaking, this data usually does not have an impact on mortgage rates because it tracks only a week’s worth of claims. This may be the case again tomorrow, however, with Friday’s monthly report coming out any sizable surprise could influence expectations for Friday’s release and lead to changes in mortgage rates.

The Labor Department will post May’s Employment data early Friday mornin g. This report gives us key employment readings such as the U.S. unemployment rate and the number of jobs added or lost during the month. Analysts are expecting to see the unemployment rate climb to 5.1% with approximately a loss of 60,000 jobs during the month. A higher than expected increase in the unemployment rate and a larger drop in payrolls would be great news for the bond market. It would probably create a sizable rally in bonds, leading to lower mortgage rates Friday. But, if we see stronger than expected numbers, we will likely get a spike in mortgage rates. Accordingly, proceed with caution if still floating an interest rate.

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.

Tags: bond, closing, employment data, inflation concerns, institute for supply management, lock, negative territory, quarter productivity, rate, release tomorrow, stock gains, U.S., Unemployment, unemployment benefits, unemployment figures, upward revision

Daily Rate Lock Recommendation – 05/29/2008 11:47:00 AM EST

Thursday’s bond market has opened in negative territory as investor interest appears to be shifting towards stocks and non-mortgage related securities. The stock markets are showing gains with the Dow up 47 points and the Nasdaq up 14 points. The bond market is currently down 23/32, which will likely push this morning’s mortgage rates higher by approximately .500 of a discount point.

There were two pieces of economic data released this morning. The first was the preliminary revision to the 1st quarter Gross Domestic Product (GDP). It matched forecasts with a 0.9% annual pace of growth that was an upward revision from the initial estimate. An important inflation reading in the data also matched forecasts, so today’s report didn’t reveal any surprises.

The Labor Department gave us last week’s unemployment figures, saying that 372,000 new claims for benefits were filed during the week. This was slightly above the 370,000 that was expected, so had little impact on bond trading or mortgage rates because this data is generally of low importance to the markets unless it varies greatly from forecasts.

Tomorrow brings us the release of two pieces of data with the first being April’s Personal Income and Outlays data at 8:30 AM. This report gives us an indication of consumer ability to spend and current spending habits. An increase in income means that consumers have more money available to spend. Since consumer spending makes up two-thirds of the U.S. economy, this data can cause movement in the financial markets and mortgage rates. Current forecasts are showing a 0.2% rise in income and a 0.2% increase in spending. Weaker readings would be considered good news for bonds and mortgage rates.

The last report of the week will come from the University of Michigan who will update their Index of Consumer Sentiment for May. It measures consumer willingness to spend by tracking their confidence in their own f inancial situations. An upward revision from the preliminary 59.5 reading would be considered a negative for bonds.

Yesterday’s bond weakness that has carried over into this morning’s trading pretty much answers the question proposed yesterday if 4.00% is going to be a level of upward resistance. There seemed to be very little resistance as bond prices dropped over the past 24 hours and the yield on the benchmark 10-year Note shot up to 4.10%. I suspect that this may now be the lower end of a new trading range if this level holds for another day. That means that bond prices are more likely to fall than they are to rise, leading to upward movement in yields and mortgage rates. Accordingly, I am holding the lock recommendations across the board until we have stability below that level.

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.

Tags: bond, bond market, bond trading, closing, index of consumer sentiment, initial estimate, investor interest, lock, negative territory, report, spending habits, stock markets, U.S., unemployment figures, upward revision, week

Daily Rate Lock Recommendation – 05/02/2008 11:47:00 AM EST

Friday’s bond market has opened down sharply following the release of stronger than expected employment figures. The stock markets are showing gains with the Dow up 66 points and the Nasdaq up 2 points. The bond market is currently down 23/32, which will likely push this morning’s mortgage rates higher by approximately .250 – .375 of a discount point.

The Labor Department brought us today’s big news with the release of April’s Employment report. They said that the unemployment rate fell to 5.0% when it was expected to rise to 5.2%. The payrolls number was also bad news for bonds with a 20,000 job decline compared to the forecasted 75,000 drop. Those readings indicate that the employment sector may not be as bad as many had thought. This has hurt bond prices and led to this morning’s increase in mortgage rates.

In a bit of good news though, the average hourly earnings portion of the report showed a 0.1% increase in earnings. This was well bel ow the 0.3% that was expected and should ease some concerns about wage inflation. Unfortunately, the other two headline numbers are influencing trading the most this morning.

March’s Factory Orders data was also released this morning. It showed a 1.4% increase in orders that greatly exceeded forecasts of a 0.2% rise. Also worth noting was a 0.4% upward revision to February’s orders. This means that combined orders for durable and non-durable goods exceeded what analysts had thought. While this is a negative for bonds, it has not had much of an influence on mortgage rates this morning as the employment figures are the driving force behind today’s losses.

Next week is fairly light in terms of economic releases. There is a moderately important piece of news scheduled for release Monday in the ISM Services Index. If it varies greatly from forecasts it could influence mortgage rates. However, it likely will have little impact on rates. Look for detai ls on the rest of next week’s events in Sunday’s weekly preview.

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.

Tags: average hourly earnings, bond, bond prices, closing, economic releases, employment figures, employment report, employment sector, Float, Release, services index, unemployment rate, upward revision, wage inflation

Daily Rate Lock Recommendation – 04/29/2008 12:16:00 PM EST

Tuesday’s bond market has opened in positive territory despite a stronger than expected economic reading. The stock markets are showing early losses with the Dow down 50 points and the Nasdaq down 9 points. The bond market is currently up 10/32, which with yesterday’s late strength should improve this morning’s mortgage rates by approximately .250 – .375 of a discount point.

The Conference Board gave us April’s Consumer Confidence Index (CCI) late this morning, revealing a stronger than expected reading of 62.3. However, an upward revision to March’s reading has actually worked favorably for bonds. The difference between forecasts and the previous March reading is extremely close to the difference between today’s reading and the revised March reading. This means that even though confidence was a little higher than thought in March, it dropped as much as it was expected to in April. The result is little impact on bond trading or mortgage rates.

Tomorrow is going to be a very interesting day as brings us the release of two important reports along with the FOMC meeting results. The first is the preliminary version of the 1st Quarter Gross Domestic Product (GDP). This is arguably the single most important report that we see on a regular basis. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best indicator of economic growth or contraction. I expect this report to cause major movement in the financial markets tomorrow and therefore the mortgage market also. Analysts are expecting to see output at an annual rate of 0.5%. A smaller increase would be ideal for mortgage rates a sit would fuel recession concerns. But, a larger increase would almost certainly cause inflation concerns in the bond market that would push mortgage rates higher tomorrow morning.

The next report of the day is the 1st Quarter Employment Cost Index (ECI), which tracks employer costs for wages and benefits. This gives us a measurement of wage-inflation. If it shows a large increase, we may see inflation concerns cause the bond market to fall and mortgage rates to rise. A smaller than expected increase would be good news for the bond market and mortgage pricing. Current forecasts are showing a rise of 0.8%.

This week’s FOMC meeting will began today but will not adjourn until tomorrow afternoon. It will likely adjourn with an announcement of another rate cut to key short term interest rates. Just how much of a reduction is open for debate. Look for another round of volatility following the 2:15 PM ET post-meeting statement.

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 onl y 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, bond trading, closing, consumer confidence index, cost index, employer costs, Float, fomc meeting, inflation concerns, mortgage market, mortgage rates, quarter employment, tomorrow, U.S., upward revision