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Mortage Rates (10/19/2010)

October 19th, 2010 3:59 PM by Lehel S.

Monday's bond market has opened in positive territory following weaker than expected economic results. The stock markets are starting the week in positive ground as they react favorable to morning earnings data, specifically from Citigroup. The Dow is up 32 points while the Nasdaq has gained 2 points. The bond market is currently up 10/32, which should improve this morning's mortgage rates by approximately .125 of a discount point.

September's Industrial Production data was released this morning, revealing a 0.2% decline compared to the 0.2% increase that was expected. This is good news for the bond market and mortgage pricing because it means that manufacturing activity at U.S. factories, mines and utilities fell last month. That hints at economic weakness, making a broader economic recovery less likely and long-term securities such as mortgage-related bonds more attractive to investors.

The rest of the week brings us three econo mic reports for the markets to digest. Tomorrow's only data is September's Housing Starts that will give us a measurement of housing sector strength and mortgage credit demand. This data tracks construction starts of new homes, but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show a decline in new home starts between August and September. I believe we need to see a significant surprise in this data for it to influence mortgage rates.

Overall, I don't see a particular day that should be labeled the single most important of the week. The week's economic reports are all moderately important to the markets, so we can't rely on any of them to drive rates. In fact, the biggest force behind any noticeable moves in mortgage pricing may actually come from the stock markets. There are many companies posting earning reports during the week, including some big names. If those earnings releases are generally weake r than forecasts, stocks may suffer, making bonds more appealing to investors. The end result would likely be an improvement in rates. The flip side though is stronger than expected earnings that drive stocks higher, pushing bond prices lower and mortgage rates upward.

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...
Posted in:General
Posted by Lehel S. on October 19th, 2010 3:59 PM

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