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Mortgage Rates (10/12/2010)

October 12th, 2010 5:05 PM by Lehel S.

Tuesday's bond market has opened in positive territory following early weakness in stocks. The stock markets are starting this holiday-shortened week in negative ground with the Dow down 50 points and the Nasdaq down 8 points. The bond market is currently up 6/32, which should improve this morning's mortgage rates by approximately .125 of a discount point from Friday's morning pricing.

There was no relevant economic data posted this morning, but we do have something of interest being released this afternoon. The Fed will release the minutes from their last FOMC meeting at 2:00 PM ET today. These have the potential to be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over inflation and the Fed's next move. If Fed members were concerned about inflationary pressures, we may see the bond market move lower and mortgage rates higher tomorrow afternoon. However, if they repeat recent comments and stateme nts that inflation is not of much concern and that there is still considerable concern about the economy, we should see little reaction in mortgage rates or a small improvement. Also worth watching is any discussion about the Fed getting more involved with purchasing government or mortgage debt. Any indication of them making more purchases should be taken as very good news for mortgage rates and will likely lead to lower rates this afternoon.

The rest of week brings us the release of five economic reports that are relevant to the mortgage market in addition to two important Treasury auctions. The week also gets heavy in quarterly earnings releases for companies, which could cause significant movement in the stock markets. The earnings results could affect bond trading as investors move funds into stocks if the reports are good. The other possibility is that the earnings reports would generally disappoint, meaning investors may move funds out of stocks and into b onds as a safe-haven. The latter would be good news for the bond market and mortgage rates.

Tomorrow has no important economic data scheduled, but it is the first day of two important Treasury auctions this week. The sale of 10-year Notes will be held tomorrow while 30-year Bonds will be sold Thursday. We often see some weakness in bonds ahead of the sales as the firms participating prepare for them. However, as long as the auctions are met with decent demand from investors, the firms usually buy them back. This tends to help recover any presale losses. But, if the sales are met with a lackluster interest from investors- particularly international buyers, the bond market may move lower after the results are posted and mortgage rates may move higher. Those results will be announced at 1:00 PM each sale day.

Overall, I am expecting to see a fair amount of movement in mortgage rates this week, especially the latter part of the week. The key reports come Fr iday, so we can label it the most important day of the week. But the active week for corporate earnings can also heavily influence trading and mortgage rates any day of the week. Accordingly, please proceed cautiously and maintain contact with your mortgage professional if you have not locked an interest rates yet.

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... 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 October 12th, 2010 5:05 PM

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