Our Real Estate Blog

Mortgage Rates (11/9/2010)

November 9th, 2010 11:23 PM by Lehel S.

Tuesday’s bond market has opened in negative territory as investors prepare for today’s Treasury auction. The stock markets are relatively calm with the Dow down 8 points and the Nasdaq up 1 point. The bond market is currently down 8/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point.

There is again no relevant economic data scheduled for release today, but we do have the first of two important Treasury auctions. The 10-year Treasury Note sale will take place today while 30-year Bonds will be sold tomorrow. Today’s sale is the more important of the two as it will give us a better indication of demand for mortgage-related securities. If it was met with a strong demand from investors, we could see bond prices rise and mortgage rates fall later today. Results will be posted at 1:00 PM ET, so any reaction will come during afternoon hours.

It is fairly common to see some weakness in bonds just ahead of the sales as participating firms prepare for them. If the results of the auctions show a fairly good demand, those pre-sale losses are usually erased during afternoon trading. So, this morning’s losses are not of much concern.

Tomorrow does have some economic data scheduled for release. September’s Goods and Services Trade Balance report will be posted early tomorrow morning. It helps us measure the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong. This is because the securities’ proceeds are worth more when sold and converted to the investor’s domestic currency. However, its results will not likely directly lead to changes in mortgage rates.

The Labor Department will give us last week’s unemp loyment figures tomorrow morning. They are expected to announce that 450,000 new claims for unemployment benefits were filed last week. This would be a decline from the previous week and be considered good news for the bond market and mortgage rates. However, since this data tracks only a single week’s worth of new claims, it is likely to have little impact on tomorrow’s mortgage pricing unless it varies greatly from forecasts. Please note, this data is being posted Wednesday this week instead of the usual Thursday release day because of the Veterans Day holiday this Thursday.

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... 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 i s 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 9th, 2010 11:23 PM



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