Our Real Estate Blog

Mortgage Rates (1/5/2011)

January 6th, 2011 1:41 PM by Lehel S.

Wednesday’s bond market has opened in negative territory after one of today’s smaller private employment related reports from payroll processor ADP indicated strength in hiring. The stock markets have had little reaction to the news since the data is not known to be highly influential. The major stock indexes are flat with the Dow nearly unchanged from yesterday’s close and the Nasdaq up 6 points. The bond market is currently down 20/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point.

There was no relevant economic data posted this morning from a governmental agency. The ADP report showed that private-sector employers added 297,000 jobs last month, greatly exceeding estimates and the largest monthly increase since they started tracking in 2000. This gives support to those who believe that the labor market is improving, causing some concern in the bond market. While this report does not carry the importance of the Labor Department statistics that are released each month, today’s news did raise some eyebrows. It also raises some concern about Friday’s monthly report that is arguably the single most important report we see each month. Accordingly, bond traders are taking a protective position ahead of Friday’s release.

Yesterday’s afternoon release of the FOMC minutes didn’t give us any significant surprises. They indicated that the Fed believes the economy is strengthening, but that significant hurdles could still hamper that growth. The usual suspects of housing and unemployment were mentioned. They also said nothing that indicated a concern about inflation, which is good news for the bond market. Overall, they did nothing to alarm bond traders, but didn’t give us anything to rally around either.

The only relevant data being posted tomorrow are weekly unemployment figures from the Labo r Department. They are expected to say that the number of new claims for unemployment benefits rose to 405,000 last week, up from the previous week’s surprise of 388,000 new claims. The higher the number of claims, the better the news for the bond market and mortgage pricing. With the almighty monthly Employment report following Friday morning, we may see a larger reaction to this data than we usually do.

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. 
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Posted by Lehel S. on January 6th, 2011 1:41 PM

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