Our Real Estate Blog

Mortgage Rates (11/30/2010)

December 2nd, 2010 12:16 AM by Lehel S.

Tuesday’s bond market has opened in positive territory despite stronger than expected economic data. The stock markets are helping bond prices this morning by posting moderate losses. The Dow is currently down 48 points while the Nasdaq has fallen 23 points. The bond market is currently up 14/32, which should improve this morning’s mortgage rates by approximately .250 of a discount point over yesterday’s morning rates.

The Conference Board posted this morning’s only important economic data when they released their Consumer Confidence Index (CCI) for November. It showed a reading of 54.1 that exceeded forecasts and was an increase from October’s reading. This means that more surveyed consumers felt better about their own financial situations than did last month. That is negative news for the bond market and mortgage rates because it means that consumers may be more willing to make large purchases in the near futur e, fueling economic activity.

Tomorrow has three relevant economic reports scheduled for release that may influence mortgage rates. The first is the revised 3rd Quarter Productivity report early tomorrow morning. This index tracks worker productivity levels and is expected to show an upward revision from the preliminary reading of 1.9%. Higher levels of productivity are thought to allow the economy to expand without inflationary pressures rising. This is good news for the bond market because economic growth itself isn’t necessarily bad for the bond market. It’s the conditions around an expanding economy, such as inflation, that hurt bond prices and mortgage rates. Current forecasts are calling for a revised annual rate of 2.4%. The higher the reading, the better the news for mortgage rates. 

November’s manufacturing index from the Institute for Supply Management (ISM) will be posted at 10:00 AM ET tomorrow. This index measures manufa cturer sentiment and can have a considerable impact on the financial markets and mortgage rates. One reason for its importance is the fact that it is the first data posted each month. Many reports we see are aged somewhere between a few weeks on monthly reports and a couple of months for quarterly releases. This index is usually posted on the first business day following the month it covers.

Current forecasts are calling for a small decline in sentiment from October to November. October’s reading was previously announced as 56.9. A weaker reading than the expected 56.5 would be good news for the bond market and mortgage rates. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened. The lower the reading the better the news for bonds because waning sentiment indicates a slowing manufacturing sector and makes a broader economic recovery less likely.

Tomorrow’s t hird report will be released during afternoon hours. The Federal Reserve will release their Beige Book at 2:00 PM ET. This report, which is named simply after the color of its cover, details economic conditions by region. That information is relied on heavily during the FOMC meetings when determining monetary policy, so its results can influence bond trading and mortgage rates if it shows any significant surprises. More times than not though, this report does not cause afternoon revisions to mortgage rates. There is no particular reason to believe this release will be any different, however, there is the possibility of it doing so.

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 December 2nd, 2010 12:16 AM



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