Our Real Estate Blog

Mortgage Rates (1/7/2011)

January 8th, 2011 9:15 AM by Lehel S.

Friday’s bond market opened flat after this morning’s employment data gave us some mixed results, but has since moved higher. The stock markets also initially showed little reaction before moving into negative ground. The Dow is currently down 35 points while the Nasdaq has now lost 11 points. The bond market is currently up 13/32, which should improve this morning’s mortgage rates by approximately.250 of a discount point.

This morning’s economic data came from the Labor Department, who announced that the U.S. unemployment rate fell to 9.4% last month, down from 9.8% in November. This was a much bigger decline than analysts had expected, making it bad news for the bond market. However, the payroll numbers worked in our favor with only 103,000 jobs added during the month when over 150,000 were expected. November’s payrolls were revised higher, limiting the positive impact this data could have had on mortgage pricing.

The average hourly earnings reading matched forecasts with an increase of 0.1%. Overall, the data give us mixed readings. The big drop in unemployment is a disappointment for the mortgage market, but the payroll numbers eased much concern that existed after this week’s ADP private sector payroll numbers showed a spike in new jobs. The markets were slow to react to the news, probably due to Fed Chairman Bernanke taking the Senate floor late this morning.

In his testimony to the Senate Budget Committee, Mr. Bernanke didn’t really give us any surprises. He did put a timeline on the job market, saying that he expects it to take 4 ? 5 years for the unemployment rate to fall to normal levels. He indicated that there are some signs of the economy gaining momentum, but that the normal threats to the recovery still exist. One the big ones is the housing sector. 

Generally speaking his testimony didn’t do much either way in terms of rais ing or easing concerns. It appears that the financial markets were waiting for his words before reacting to the economic data. I think that the lack of much stronger than expected payrolls and the lack of extremely upbeat news from Chairman Bernanke have allowed the bond market to exhale and move higher now. There is little to be concerned with this afternoon, but keep an eye on the markets as they can move quickly on us. 

Next week brings us the release of several important reports and events that have the potential to significantly affect the markets and mortgage pricing. They include a highly important measurement of consumer spending and two key inflation readings along with the Fed Beige Book and two Treasury auctions. All of the relevant events will take place between Wednesday and Friday, leaving the first two days of the week to likely be driven by the stock markets. Look for more details on next week’s activities in Sunday’s weekly previ ew.

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 8th, 2011 9:15 AM

Archives:

Categories:

My Favorite Blogs:

Sites That Link to This Blog: