Our Real Estate Blog

Mortgage Rates (1/25/2011)

January 27th, 2011 9:10 AM by Lehel S.

Tuesday’s bond market is in positive territory even though this morning’s economic data showed much stronger than expected results. The stock markets are showing minor losses with the Dow down 26 points and the Nasdaq down 7 points. The bond market is currently up 8/32, which should improve this morning’s mortgage rates slightly.

The Conference Board reported late this morning that their Consumer Confidence Index (CCI) for January spiked to 60.6 when it was expected to show a 53.5 reading. This means that surveyed consumers were much more optimistic about their own financial situations than many had thought and indicates that consumers may be willing to make large purchases in the near future. This is bad news for the bond market because consumer spending fuels economic growth, making long-term securities such as mortgage bonds less attractive to investors. Fortunately though, the market has seemed shrug the news off without much concern .

Tomorrow’s only economic data is December's New Home Sales report at 10:00 AM ET. It is considered to be the sister release to last week's Existing Home Sales. Wednesday’s release is forecasted to show an increase in sales of newly constructed homes, but is not important enough to heavily influence mortgage pricing unless it varies greatly from forecasts.

The year's first FOMC meeting begins today and will adjourn tomorrow afternoon. It is expected to yield no change to short-term interest rates, but as is often the case, traders will be looking for any indication of the Fed's next move and when they may make it. I believe that there is little chance of indicating a possible rate hike in the near future, but any hints of a change in theories or timetable by the Fed will cause afternoon volatility in the financial and mortgage markets.

Also tomorrow is the first of two Treasury auctions that may influence bond trading and mortgag e pricing. The Fed will auction 5-year Treasury Notes tomorrow and 7-year Notes Thursday. If they are met with a strong demand from investors, the broader bond market may rally during afternoon hours. However, a lackluster interest in the sales could lead to bond selling and higher mortgage rates.

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 in:General
Posted by Lehel S. on January 27th, 2011 9:10 AM



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