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Mortgage Rates (11/22/2010)

November 22nd, 2010 11:29 PM by Lehel S.

Monday’s bond market has opened in positive territory following early weakness in stocks. The stock markets are reacting negatively to concerns about overseas financial issues. The Dow is currently down 77 points while the Nasdaq is just below Friday’s closing level. The bond market is benefiting from those concerns with a morning gain of 15/32, which should improve this morning’s mortgage rates by approximately .250 - .375 of a discount point from Friday’s morning pricing.

There is no relevant data scheduled for release today, so I am expecting this morning’s tone to extend into afternoon trading. Any changes to mortgage rates will likely come from further movement in stocks. If the major stock indexes extend this morning’s losses, we could see downward revisions to mortgage rates later today. However, a rebound in stocks could erase some of this morning’s bond gains and lead to an upward revisio n to rates sometime before the end of the day.

This holiday-shortened week brings us the release of six relevant economic reports for the markets to digest along with the last FOMC meeting’s minutes and two potentially important Treasury auctions. All of the week’s data is being posted over just two days, so tomorrow and Wednesday should be interesting for mortgage shoppers. 

Tomorrow has two economic reports scheduled with the first being the initial revision to the 3rd Quarter Gross Domestic Product (GDP). It is expected to show an upward revision from last month’s preliminary reading of a 2.0% annual rate of expansion. The GDP measures the total of all goods and services produced in the U.S. and is considered to be the best measurement of economic activity. Current forecasts call for a reading of approximately 2.4%, meaning that there was more economic growth during the third quarter than previously thought. This would be bad new s for the bond market and mortgage rates, but a smaller than expected reading could improve mortgage rates.

October’s Existing Home Sales data will be posted late tomorrow morning. This report, along with Wednesday’s New Home Sales, are the least important reports of the week. They give us a measurement of housing sector strength and mortgage credit demand, but the bond market generally does not rely heavily on their results. The Existing Home Sales report is expected to show a decline in sales Tuesday, while the New Homes Sales report is predicted to show a small increase. Declines in these reports would be good news for the bond market and mortgage pricing, but unless they show significant surprises neither will likely have a significant impact on rates.

Also worth noting is the release of the minutes from the last FOMC meeting tomorrow afternoon. Traders will be looking for any indication of the Fed’s next move regarding monetary policy. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. This release is one of those that may cause some volatility in the markets after they are posted, or could be a total non-factor. If they show anything surprising, we may see some movement in rates tomorrow afternoon, but it is more likely there will be no reaction.

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 November 22nd, 2010 11:29 PM

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