Our Real Estate Blog

Mortgage Rates (11/17/2010)

November 17th, 2010 9:29 PM by Lehel S.

Wednesday’s bond market has opened in positive territory following the release of favorable economic data and a relatively flat open in stocks. The stock markets don’t appear ready to rebound from yesterday’s selling with the Dow up only 5 points and the Nasdaq up 8 points. The bond market is currently up 9/32, which with yesterday’s afternoon strength should improve this morning’s mortgage rates by approximately .375 - .500 of a discount point over yesterday’s morning pricing.

There were two reports posted this morning. The first was October's Consumer Price Index (CPI) that showed weaker than expected inflation readings. The Labor Department said that the overall CPI reading rose 0.2% and that the core data was unchanged from September’s level. Both of these readings were just shy of forecasts, meaning inflationary pressures were not as strong at the consumer level of the economy as many had thought. That is go od news for the bond market and mortgage rates, but did not come as too much of a surprise after yesterday’s PPI numbers.

The Commerce Department gave us today’s second piece of data. They announced that construction starts of new homes fell 11.7% last month, falling to their lowest level in the past year and a half. This is favorable data for the bond market and mortgage rates since it indicates housing sector weakness. Unfortunately, the data is not considered to be highly important, preventing it from influencing this morning’s mortgage rates by much.

The final monthly report of the week will come from the Conference Board late tomorrow morning when they release their Leading Economic Indicators (LEI) for October. This is a moderately important report that attempts to predict economic activity over the next three to six months. It is expected to show a 0.6% increase, meaning economic activity will rise fairly rapidly over the nex t couple of months. Generally speaking, this would be bad news for bonds. However, since this data is considered only moderately important, its results need to vary by a wide margin from forecasts for it to affect mortgage rates.

Also tomorrow, the Labor Department will give us last week’s unemployment figures. They are expected to announce that 442,000 new claims for unemployment benefits were filed last week. This would be an increase from the previous week and considered good news for the bond market. However, since this is only a week’s worth of new claims data, its impact on tomorrow’s mortgage rates will likely be minimal. The larger the number of new claims filed, the better the news for the bond market and rates.

If I were considering financing/refinancing a home, I would.... Float 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 pla ce 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 November 17th, 2010 9:29 PM

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