Our Real Estate Blog

Mortgage Rates (12/20/2010)

December 20th, 2010 9:32 AM by Lehel S.

Monday’s bond market has opened in positive territory as last week’s late strength extends into this morning’s trading. The stock markets are doing their part but showing losses rather than gains with the Dow down 38 points and the Nasdaq down 5 points. The bond market is currently up 14/32, which with Friday’s afternoon strength should improve this morning’s mortgage rates by approximately .625 - .750 of a discount point.

There is no relevant economic news scheduled for release today or tomorrow. This means we can look towards the stock markets for direction in bond trading and mortgage rates. If the major stock indexes move higher, we could see pressure in bonds and mortgage rates. Ideally, we would like to see stock weakness that helps boost bond prices and improve mortgage pricing.

This holiday-shortened trading week brings us the release of six monthly or quarterly economic reports, all being posted Wednesday and Thursday. Only a couple of the reports being released are considered to be of high importance to the markets. With the Christmas holiday being observed this week, we can expect very thin trading. This means that we may see a larger reaction than normal to some news because there will be fewer traders working and less transactions being made. 

Overall, I am expecting to see some movement in the markets and mortgage rates, but nothing drastic unless we get some surprising results from the week’s data. That said, we still need to keep a cautious approach following the surprising volatility of the past couple of weeks. I still believe there is more room for improvements to mortgage rates. We saw some improvement late last week and I believe there is a decent possibility of extending those gains the next couple of days.

The bond market will close early Thursday and will be closed all day Friday in observance of the Christmas Day holiday. This m eans that firms that trade bonds will likely be keeping only a skeleton staff the latter part of the week and raises the possibility of a stronger reaction to surprises in the economic data than we normally would see. Accordingly, proceed cautiously this week if still floating an interest rate and closing in the immediate future.

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 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 20th, 2010 9:32 AM

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