Daily Mortgage Rate Lock Advisory

Wednesday’s bond market has opened in negative territory following early stock strength and concerns over today’s FOMC meeting adjournment. The stock markets are showing strong gains with the Dow up 130 points and the Nasdaq up 32 points. The bond market is currently down 12/32, which should push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point compared to yesterday’s morning rates.

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 has been minimal.

It will likely be an active afternoon for the markets and mortgage rates. The results of today’s 10-year Treasury Note auction will be posted at 1:00 PM ET and this week’s
FOMC meeting will adjourn at 2:15 PM ET. Either of these events can lead to afternoon swings in the financial markets and mortgage rates, so expect to see some afternoon revisions today.

This report will be updated shortly after the markets have an opportunity to react to the FOMC statement, but I am holding my cautious approach towards rates into this afternoon’s events. I would not be surprised to see upward revisions to rates later today.

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 Feb. 11th

Wednesday’s bond market has opened in positive territory again as traders continue to digest yesterday’s activities on the economic stimulus and Fed bailout packages. The stock markets are rebounding from yesterday’s sell off but have only been able to recover part this losses so far. The Dow is currently 55 points and the Nasdaq is up 8 points. The bond market is currently up 8/32, which should improve this morning’s mortgage rates by approximately .250 of a discount point.

Today’s only economic news was December’s Goods and Services Trade Balance that showed a trade deficit of $39.9 billion in December. This was a larger than expected deficit with latest forecasts calling for it to stand at $35.7 billion. But it was still the lowest trade deficit since February 2003. Unfortunately, this data is not considered to be of high importance to the bond market and mortgage rates.

The second stage of this week’s quarterly refunding or sales of govern ment debt is today with 10-year Treasury Notes being sold. The results of the sale will be posted at 1:00 PM ET. If it was met with strong demand, easing recent fears about the amount of debt being sold to fund the economic stimulus and Fed bailout programs, we should see bond prices move higher during afternoon trading. This may lead to a downward revision in mortgage rates. However, if the sale was met with a poor demand, we could see selling in bonds this afternoon that will lead to upward revisions to mortgage rates.

Tomorrow morning brings us the release of January’s Retail Sales data. This report is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched quite closely. If tomorrow’s report reveals weaker than expected sales, the bond market should thrive and mortgage rates will fall. However, a stronger reading than current forecast of a d ecline in sales of 0.3% may drive mortgage rates higher tomrorow.

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. 2nd

Friday’s bond market has opened flat despite weaker than expected economic news. The stock markets are starting the new year in positive ground with the Dow up 122 points and the Nasdaq up 22 points. The bond market is currently almost unchanged from Wednesday’s close, but we will likely still see an increase in this morning’s mortgage rates of approximately .250 of a discount point.

Today’s only economic news was the Institute for Supply Management’s (ISM) manufacturing index. It showed a reading of 32.4, which was its lowest reading since June 1980. Analysts were expecting to see a reading of 35.4, meaning that manufacturer sentiment was weaker than many had thought. This is favorable news for bonds but due partly to this morning’s stock gains, this data has failed to push mortgage rates lower.

The bond market will close early again today, therefore, I don’t believe we will see much of an improvement in today’s rates. In fact, we may see so me additional pressure on bonds as traders close the shortened week. This may lead to upward revisions to mortgage rates before today’s 2:00 PM close.

Next week is fairly busy in terms of economic releases. There is no relevant news scheduled for release Monday, but the rest of the week brings us the release of several reports that may affect mortgage rates including December’s Employment report next Friday. 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… 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 Oct. 29th

WEDNESDAY AFTERNOON UPDATE:

This week’s FOMC meeting has adjourned with an announcement of a half-point rate cut by the Fed in an effort to stimulate economic activity. The move was widely expected by market participants, but has still boosted stocks and hurt bonds. The Dow is currently up 218 points while the Nasdaq has gained 44 points. The bond market is currently down 17/32, which will likely push this afternoon’s mortgage rates higher by approximately .250 of a discount point.

The post-meeting statement indicated that the Fed was still concerned about the economy and was expecting further weakness. This led to speculation that the Fed may lower short-term rates again in the future despite the fact that the Federal Funds rate is now at a record low of 1.00%. It has not been this low since June 2003 to June 2004. The fact that it appears the Fed has conceded more measures may be needed and is ready to act has helped drive stock prices higher during afternoon trading. This has made bonds less attractive to investors and is the reason we likely will see upward revisions to mortgage rates this afternoon.

The Commerce Department reported this morning that Durable Goods Orders for September rose 0.8% when they were expected to fall 1.0%. This means that manufacturing activity was stronger than expected, which is bad news for bonds and mortgage rates.

Tomorrow morning brings us the release of the preliminary reading of the 3rd Quarter Gross Domestic Product (GDP). The GDP is considered to be the benchmark measurement of economic growth because it is the sum of all goods and services produced in the U.S. and therefore is likely to have a major impact on the financial markets and mortgage pricing. There are three versions of this report, each a month apart. Tomorrow’s release is the first and usually has the biggest impact on the markets. Current forecasts call for a decline of approximately 0. 5% in the GDP. If this report shows a larger decline, I am expecting to see the bond market rally and mortgage rates to fall tomorrow.

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 – Friday Sep. 19th

Friday’s bond market has opened sharply lower following a huge rally in stocks. The stock markets are reacting favorably to the news of further Fed intervention in the banking crisis. This has pushed the Dow higher by 375 points and the Nasdaq up 71 points. The effect on bonds has not been pretty. The bond market is currently down 53/32, which will likely push this morning’s mortgage rates higher by approximately .625 of a discount point or slightly more than 1/8 of a percent in rate.

The stock market reaction to the Fed news isn’t exactly surprising. Neither is the bond market’s reaction to the stock rally. The same funds that were shifted into bonds while stocks were tanking are now being moved out and back into stocks. This has driven bond yields and mortgage rates much higher. I suspect that the markets will stabilize sometime early next week, as long as we don’t get more news.

I would not be surprised to see upward revisions to mortgage rates this afternoon. Accordingly, I am holding the lock recommendations until the markets seem to calm down. Once this happens, I most likely will be shifting back to a float position for longer term periods and possibly short-term periods. The decision will be made once the markets settle down and we can see where the major indexes and bond market stand.

Next week is pretty light in terms of economic releases. There are a handful of reports scheduled, but they don’t begin until mid-week and only one of them is considered to be of high importance. 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… 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 – Thursday Sep. 18th

Thursday’s bond market has opened in negative territory as the markets go through another day of significant volatility. The stock markets are currently showing gains, but are well off earlier highs. The Dow is currently up 66 points but is down over 100 points from its earlier high. The Nasdaq is now up 7 points but has slipped nearly 40 points from its peak of the morning. The bond market is currently down 10/32, however, we will likely see little change in mortgage rates due to strength late in the day yesterday.

This morning’s economic news was actually favorable to bonds, but the seesaw activity in stocks and the fact that neither of today’s releases are considered to be very important has prevented bonds from reacting to the data in a positive way. The Labor Department said that 455,000 new claims for benefits were filed last week. This exceeded analysts’ forecasts but since the data tracks only a week’s worth of claims, its impact on bonds and mortgage rates usually is fairly minimal.

Also posted this morning was August’s Leading Economic Indicators (LEI) that showed a 0.5% drop. This index attempts to measure economic activity over the next three to six months, meaning economic activity is being predicted to slow fairly quickly during the near future. That is considered good news for bonds, especially since it was expected to fall only 0.2%. But again, stocks and financial sector news is taking the lead in bond trading.

There is no relevant data scheduled for release tomorrow. This leaves stocks to again heavily influence trading. Generally speaking, falling stock prices should push bonds higher and mortgage rates lower as investors shift funds for safety. But if stock prices rise, those same funds will likely be pulled from bonds to be put back into stocks, leading to upward revisions to mortgage rates.

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.