Our Real Estate Blog

Mortgage Rates (10/1/2010)

October 1st, 2010 10:20 AM by Lehel S.


Friday's bond market opened in negative territory after some of this morning's economic data revealed stronger than expected activity. The stock markets are also contributing to the bond weakness with gains of 64 points in the Dow and 15 points in the Nasdaq. The stock market is currently down 11/32, but we should still see a slight improvement in this morning's mortgage rates due to strength during trading late yesterday.

August's Personal Income and Outlays data was released early this morning. It showed that personal income rose 0.5% last month while spending rose 0.4%. Both of these readings were larger increases than what analysts had forecast, making them negative news for the bond market and mortgage rates. The data indicates that consumers had more money available to spend and spent more than what many market participants had thought. This fuels economic activity, making long-term securities such as mortgage bonds less attractive to investors.

The University of Michigan revised their Index of Consumer Sentiment for September late this morning. It showed a revised reading of 68.2 that was an upward change from the preliminary estimate of 66.6. Analysts were expecting an increase in the index, but not by this much. This means that consumers were more optimistic about their own financial situations than previously thought, which is bad news for bonds and mortgage rates because it means consumers more likely to make large purchases in the near future.

The biggest report of the week came from the Institute for Supply Management (ISM), who said their manufacturing index stood at 54.4 last month. This was a sizable decline from August's 56.3, indicating fewer manufacturers felt business improved in September than did in August. This is basically good news for the bond market and mortgage rates, but it was not enough of variance from forecasts of a 54.8 reading to offset the negative tone in bonds se t by stocks and the morning's other data.

Next week is very light in terms of the number of economic reports and events scheduled that may influence mortgage rates. There is data scheduled for release Monday, but it is not one of the more important reports we see each month. However, the same cannot be said for next Friday's release of September's Employment report. Monday's release is August's Factory Orders data that will give us an indication of manufacturing sector strength. 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... 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 October 1st, 2010 10:20 AM

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