Our Real Estate Blog

Mortgage Rates (10/4/2010)

October 4th, 2010 11:08 AM by Lehel S.


Monday's bond market has opened in positive territory following slightly weaker than expected economic news and a negative open in stocks. The stock markets are showing minor losses during early trading, but the fact they are not showing gains has helped keep bonds positive. The Dow is currently down 22 points while the Nasdaq has lost 12 points. The bond market is currently up 5/32, which should improve this morning's mortgage rates by approximately .125 - .250 of a discount point from Friday's morning pricing.

The Commerce Department gave us today's only economic news by releasing August's Factory Orders data late this morning. They reported that new order's for durable and non-durable goods fell 0.5%, indicating that the manufacturing sector was slightly softer than what many had thought. This is good news for the bond market because a weakening manufacturing sector will make a broader economic recovery much less likely. Since bonds tend to thrive duri ng a weak economy, this can be taken as good news for mortgage rates. 

The rest of the week brings us little data except for Friday's important Employment report. There is nothing of relevance scheduled for tomorrow, so look for the stock markets to be behind any changes to mortgage rates. If the major stock indexes rally, the bond market will likely move lower the next couple of days as funds shift from bonds into stocks. As bond prices drop, their yields move higher. And since mortgage rates tend to follow bond yields, we would prefer to see stock weakness and bond prices to move higher. 

Overall, I suspect we will have a fairly quiet first part of the week with volatility increasing as the week progresses. Labeling Friday as the most important day is easy due to the importance of the Employment report and the lack of data scheduled other days. We may see movement in rates from day-to-day, but I believe we will see the most movement the latter p art of the week.

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 October 4th, 2010 11:08 AM

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