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Rate Lock Advisory - Friday May. 21st

May 21st, 2010 12:17 PM

Rate Lock Advisory - Friday May. 21st

Friday's bond market has opened in positive territory again as yesterday's stock selling extends into this morning. The stock markets are showing much smaller losses than yesterday's 376-point drop in the Dow but are still in the red, making bonds more appealing to investors. The bond market is currently up 13/32, but we will likely only see an improvement in this morning's mortgage rates of approximately .125 of a discount point.

There is no relevant economic data being posted today, so any changes to mortgage rates will likely come from stock market movements. The bond market has staged a significant rally recently, but almost entirely due to stock losses that came as a result of global economic concerns. Even with the stock sell-off, I strongly believe the bond market is over-bought and is very likely to go through a correction once the stock markets stabilize. It is my opinion that the correction will come even of stock prices do not rebound. Just a stabilization of the major indexes will be enough to fuel profit-taking in the bond market and a spike in mortgage rates. Therefore, please be careful if still floating an interest rate, especially with a closing date more than a couple weeks away.

Next week is packed with economic releases for the markets to digest. Whether or not they will mean much to bond traders remains to be seen. If the stock selling continues into next week, the economic data may be ignored and bonds could benefit further. We may see slightly lower mortgage rates, however, with the benchmark 10-year Treasury Note now at 3.16% it is difficult to believe there is room for much more improvement.

There is relevant data scheduled for release each day next week, including Monday when April's Existing Home Sales report will be posted by the National Association of Realtors. This report gives us a measurement of housing sector strength and mortgage credit demand. It is not considered to be one of the more important pieces of data that we see each month, so it usually takes a large variance between forecasts and its actual results for the report to affect mortgage rates. But with data being posted each day and an early close Friday, there is potential to having another active week for the markets and mortgage pricing. 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... 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.

Posted by Frank Barber on May 21st, 2010 12:17 PMPost a Comment (0)

Rate Lock Advisory - Tuesday Mar. 9th

March 9th, 2010 12:44 PM

Rate Lock Advisory - Tuesday Mar. 9th

Tuesday's bond market has opened up slightly, but not enough to improve mortgage rates. The stock markets are showing minor gains with the Dow up 13 points and the Nasdaq up 9 points. The bond market is currently up 4/32, which should keep this morning's mortgage rates at yesterday's levels.

There is no relevant economic data scheduled for release today or tomorrow morning. The 10-year Treasury Note auction will be held tomorrow while the 30-year bond sale will be held Thursday. Results of both sales will be posted at 1:00 PM ET of each day. If investor demand was high, we may see bonds rally during afternoon trading, however, weak demand could lead to selling and an increase to mortgage rates. The results of the last sales do not give us much to look forward to, so it is not likely that these auctions will fuel a bond rally and a downward trend in mortgage pricing.

The week's first factual economic data will come Thursday morning. January's Goods and Services Trade Balance will be released early Thursday morning. It gives us the size of the U.S. trade deficit and is expected to show a $41.0 billion deficit. It is the week's least important piece of news and likely will not influence mortgage rates much.

Also Thursday is the weekly release of unemployment figures from the Labor Department. They are expected to say that 460,000 new claims for unemployment benefits were filed last week, which would be a decline from the previous week. The larger the number, the better the news for bonds and mortgage pricing. However, since it tracks only a week's worth of new claims, it usually takes a wide variance between forecasts and the actual total for it to affect 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.

Posted by Frank Barber on March 9th, 2010 12:44 PMPost a Comment (0)

Rate Lock Advisory - Tuesday Mar. 2nd

March 2nd, 2010 11:31 AM

Rate Lock Advisory - Tuesday Mar. 2nd

Tuesday's bond market has opened in negative territory following early stock gains. The stock markets are extending yesterday's gains with the Dow up 40 points while the Nasdaq has gained 11 points. The bond market is currently down 6/32, which will likely push this morning's mortgage rates higher by approximately .250 of a discount point.

There is no relevant economic data scheduled for release today, leaving the stock markets to drive bond trading and mortgage rates today. If the stock markets extend their current gains, we may see bond prices fall and mortgage rates rise this afternoon. If they give back their early gains, bonds could move into positive ground, leading to downward revisions to mortgage pricing.

The Fed Beige Book will be posted at 2:00 PM ET tomorrow. There is no important data being posted during morning hours. The Beige Book details economic activity throughout the country by region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading. It probably will not cause a major sell off in the stock or bond markets, but could cause enough movement in bond prices to possibly improve or worsen mortgage rates slightly if it reveals any significant surprises.

There are two reports scheduled for release Thursday that could affect mortgage rates. They are a quarterly productivity index and a measurement of manufacturing sector strength. Neither are considered highly important, but can influence bonds trading enough to affect 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.

©Mortgage Commentary 2010

Posted by Frank Barber on March 2nd, 2010 11:31 AMPost a Comment (0)

Rate Lock Advisor for Wed. Nov. 18th 2009

November 18th, 2009 1:03 PM

Rate Lock Advisory - Wednesday Nov. 18th

Wednesday's bond market opened in negative territory despite some extremely favorable economic news. The stock markets are also in negative ground with the Dow down 35 points and the Nasdaq down 16 points. The bond market is currently down 4/32, which should again keep this morning's mortgage rates unchanged.

This morning's major economic news was the release of October's Consumer Price Index (CPI). It revealed a 0.3% increase in the overall reading and a 0.2% rise in the more important core data reading. Both of these figures were stronger than expected, indicating that prices at the consumer level of the economy rose more than thought. This can be considered bad news for bonds and mortgage rates because it raises concerns about inflation in the economy. Inflation is the number one nemesis of the bond market because it erodes the value of a bond's future fixed interest payments. This leads to bond selling and higher mortgage rates.

The second report of the day was October's Housing Starts. It showed a surprisingly large drop in starts of new construction homes. The 10.6% decline in starts drops them to their lowest level in six months and is a setback for those who felt the housing sector may be strengthening. Unfortunately for mortgage shoppers, the negative CPI news is much more important to the markets than the favorable housing data is. There, this data has had little impact on this morning's mortgage rates.

The Conference Board will release its Leading Economic Indicators (LEI) late tomorrow morning. This is a moderately important report that attempts to predict economic activity over the next three to six months. It is expected to show a 0.4% increase, meaning economic activity will rise over the next couple of months. Generally speaking, this would be bad news for bonds. However, since this data is considered only moderately important, its results need to vary greatly from forecasts for it to affect mortgage rates.

We will also get weekly unemployment figures from the Labor Department tomorrow morning. However, unless there is a wide variance between the number of claims announced and forecasts of 504,000, I don't think this report will have much of an influence on bond trading or mortgage pricing.

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.

Posted by Frank Barber on November 18th, 2009 1:03 PMPost a Comment (0)

Rate Lock Advisor Nov. 17th 2009

November 17th, 2009 12:06 PM

Rate Lock Advisory - Tuesday Nov. 17th

Tuesday's bond market opened in negative territory despite some extremely favorable economic news. The stock markets are showing relatively minor losses with the Dow down 18 points and the Nasdaq down 8 points. The bond market is currently down 3/32, which will likely keep this morning's mortgage rates close to yesterday's levels.

The Labor Department gave us the first and more important of today's two relevant economic reports. They announced that the Producer Price Index (PPI) rose 0.3% last month, falling short of expectations. However, the big news was the core data reading that fell 0.6% when it was expected to rise 0.1%. This means that inflationary pressures at the producer level of the economy were well below what analysts had thought. That is very good news for bonds and mortgage rates, but it appears that the bond market was not too impressed with this morning's news.

The second report of the morning was October's Industrial Production data. It showed that output at U.S. factories, mines and utilities rose only 0.1% when it was expected to rise 0.4%. This is also good news for bonds because rapid increases in manufacturing activity indicates a strengthening economy.

There are again two reports scheduled for release tomorrow. October's Consumer Price Index (CPI) will be released at 8:30 AM ET tomorrow. This index is similar to today's PPI, except it measures inflationary pressures at the more important consumer level of the economy. The overall reading is expected to show an increase of 0.2% while the core data is expected to rise 0.1%. Weaker than expected readings would be good news for bonds and mortgage rates, while larger than forecasted increases could lead to higher mortgage rates tomorrow.

Tomorrow's second report is October's Housing Starts. This data gives us an indication of housing sector strength, but usually does not have a noticeable impact on mortgage rates. I don't expect this month's version to be any different unless it varies greatly from analysts' forecasts and the CPI matches expectations. It is expected to show a small increase in starts of new homes.

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.

Posted by Frank Barber on November 17th, 2009 12:06 PMPost a Comment (0)

Rate Lock Advisor 11/13

November 13th, 2009 11:43 AM

Rate Lock Advisory - Friday Nov. 13th

Friday's bond market has opened flat following favorable consumer confidence news but early stock gains. The stock markets are looking to close the week in an upward move with the Dow up 78 points and the Nasdaq up 12 points. The bond market is nearly unchanged, but we should see an improvement in this morning's mortgage rates of approximately .250 of a discount point due to strength late yesterday.

September's Goods and Services Trade Balance report was posted this morning, giving us the size of the U.S. trade deficit. It revealed a deficit of $36.5 billion that exceeded forecasts by a wide margin. Fortunately for mortgage rates this data is not considered to be highly important to the markets.

The second report of the day was the University of Michigan's Index of Consumer Sentiment for November. It came in with a reading of 66.0, falling well short of analysts' expectations. This was good news for bonds because it indicated that consumers were much less optimistic about their own financial situations than many had thought. That means they are less likely to make large purchases in the near future, limiting fuel for economic growth.

Yesterday's 30-year Treasury Bond auction drew a lackluster interest from investors. Many of the readings used to measure investor demand fell short of recent sales. This means that investors are leery of purchasing long-term debt from the U.S., but mortgage-related bonds faired well despite the news. This led to many lenders revising rates lower late yesterday or this morning.

Next week is much more active in terms of economic releases than this week was. We do have important data being posted Monday morning when the Commerce Department will release October's Retail Sales data. This is a very important release because it gives us a measurement of consumer spending. Since consumer level spending makes up two-thirds of the U.S. economy, any related news is watched closely.

The rest of the week gives us additional important reports such as the two key inflation indexes. Look for more details on those and the rest of 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... 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.

Posted by Frank Barber on November 13th, 2009 11:43 AMPost a Comment (0)

Article from Wall Street Journal on mortgage rates

November 13th, 2009 8:57 AM

By AMY HOAK

Home-mortgage rates fell this week, with long-term mortgage rates hitting their lowest levels in five weeks, Freddie Mac reported Thursday.

The 30-year fixed-rate mortgage has been below 5% for five of the last seven weeks, according to Freddie Mac's weekly survey of conforming mortgage rates. The mortgage averaged 4.91% for the week ending Nov. 12, down from last week's 4.98% average. It averaged 6.14% a year ago.

Fifteen-year fixed-rate mortgages averaged 4.36% this week, down from last week's 4.40% average. The mortgage averaged 5.81% a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.29% this week, down from 4.35% last week and 5.98% a year ago. And 1-year Treasury-indexed ARMs averaged 4.46%, down from 4.47% last week and 5.33% a year ago.

To obtain the rates, the 30-year fixed-rate mortgage required payment of an average 0.7 point, while the 15-year fixed-rate mortgage, the 5-year ARM and the 1-year ARM required an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.

"Mortgage rates eased further over the week, helping to promote an affordable home-purchase market and stimulate refinance," said Frank Nothaft, Freddie Mac chief economist, in a news release. "This comes at a time when house-price declines are moderating and consumer demand for prime mortgages at commercial banks has picked up."

Also on Thursday, the Mortgage Bankers Association reported that the volume of mortgage applications filed to purchase homes for the week ending Nov. 6 hit their lowest level in nearly nine years.

The volume of mortgage applications filed to purchase homes last week hit the lowest level in nearly nine years, the Mortgage Bankers Association reported Thursday.

Applications for loans to buy homes fell a seasonally adjusted 11.7% in the week ended Nov. 6 from with the previous week--bringing volumes to their lowest since December 2000. The Washington-based MBA's weekly survey covers more than half of all applications filed for U.S. retail residential mortgages.

Posted by Frank Barber on November 13th, 2009 8:57 AMPost a Comment (0)

Rate Lock Advisor 11-12-09

November 12th, 2009 12:24 PM

Rate Lock Advisory - Thursday Nov. 12th

Thursday's bond market has opened fairly flat despite stock weakness. The stock markets are showing losses with the Dow down 52 points and the Nasdaq down 7 points. The bond market is nearly unchanged from Tuesday's close, so we will likely see little change in this morning's mortgage rates.

The Labor Department gave us last week's unemployment figures this morning. They reported that 502,000 new claims for unemployment benefits were filed last week, falling short of expectations. That is theoretically bad news for bonds, but since this data gives us only a week's worth of new claims its impact on mortgage rates is usually minimal. Accordingly, it has not influenced today's mortgage pricing.

We also have the 30-year Treasury Bond auction to watch today. It is considered to be less important to mortgage rates than Tuesday's 10-year sale was, but does have the potential to affect mortgage rates. Bond traders will be looking for a strong demand from investors, particularly international buyers. If there is an overwhelmingly strong interest in the sale, bonds may rally after the results are posted at 1:00 PM ET tomorrow. But a weak sale could lead to bond selling and higher mortgage rates later this afternoon.

The first monthly data of the week is tomorrow's release of September's Goods and Services Trade Balance report. It helps us measure the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong. This is because the securities' proceeds are worth more when sold and converted to the investor's domestic currency. However, its results will not likely directly lead to changes in mortgage rates. It is expected to show a $31.8 billion trade deficit.

Tomorrow's second report is November's preliminary reading of the University of Michigan's Index of Consumer Sentiment. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It is expected to show a reading of 71.0, up slightly from October's final reading of 70.6. That would be considered negative news for bonds because rising sentiment means consumers are more optimistic about their own financial situations and are more likely to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely.

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.

Posted by Frank Barber on November 12th, 2009 12:24 PMPost a Comment (0)

Rate Lock Advisor

November 12th, 2009 11:26 AM

Rate Lock Advisory - Wednesday Nov. 11th

WEDENSDAY'S MARKET UPDATE:

The bond market is closed today in observance of the Veterans Day holiday. The stock markets are open for trading and are showing gains with the Dow up 71 points and the Nasdaq up 21 points. Since the bond market is closed today, there will likely be no or little change to this morning's mortgage rates even if your lender is open for business.

There is no relevant economic data scheduled for release today. Any government agencies that would post such news are closed for Veterans Day. There are no private sector reports being released either, such as data from the Conference Board, National Association of Realtors or University of Michigan that we regularly see.

Yesterday's key 10-year Treasury Note auction went fairly well. A decent demand is a good way of describing investor interest, but certainly not strong. Some of the components that are used to measure the success of these sales showed slightly better results than the last 10-year sale while others were lower. The results brought little reaction from the bond market and mortgage rates.

The only factual economic data scheduled for release tomorrow are weekly unemployment figures from the Labor Department. They are expected to show that 510,000 new claims for benefits were filed last week. This would be a slight change from the previous week's total, but since this data tracks a only week's worth of new claims it likely will not impact bond trading enough to affect mortgage rates. It will require a wide variance between forecasts and the actual number of new claims to see mortgage rates react to this data.

We also have the 30-year Treasury Bond auction tomorrow. It is considered to be less important to mortgage rates than yesterday's 10-year sale was, but does have the potential to affect mortgage rates. Bond traders will be looking for a strong demand from investors, particularly international buyers. If there is an overwhelmingly strong interest in the sale, bonds may rally after the results are posted at 1:00 PM ET tomorrow. But a weak sale could lead to bond selling and higher mortgage rates tomorrow afternoon.

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

Posted by Frank Barber on November 12th, 2009 11:26 AMPost a Comment (0)

8000 Dollar tax credit extended for first time home buyers!!!

November 10th, 2009 12:28 PM

President Obama signed the popular $8,000 First Time Home Buyer tax credit into law last Friday, November 6. That comes as a sigh of relief for the many first time home buyers who haven't yet found the perfect property or are waiting to hear back on a short sale approval from an underlying bank. The extension is particularly helpful for those looking to purchase a short sale since buyers only have to be under contract by April 30th, 2010. Buyers will then have an additional 60 days to close.

The Tax Credit was also amended to include move-up buyers who've been in their current home 5 consecutive years or longer. Those eligible buyers will receive a $6,500 credit, as opposed to the $8,000 for first timers.

Income limits were also increased, a welcome change, from $75,000 to $125,000 for individuals and from $150,000 to $225,000 for couples. Additionally, the home being purchased must not be over $800,000.

The real estate industry expects this to give a great boost to the housing market locally. Local Realtors are especially excited about the buy up credit. It gives current homeowners, our proven mortgage holders, extra incentive to buy again.

The Real Estate and Mortgage industries alike expect increased activity from the tax credit extension and urge potential buyers to capitalize on their window of opportunity.

For more information visit the tax credit official site: http://http://www.federalhousingtaxcredit.com

Posted by Frank Barber on November 10th, 2009 12:28 PMPost a Comment (0)