Our Real Estate Blog

Mortgage Rates (12/29/2010)

December 29th, 2010 9:54 AM by Lehel S.

Wednesday’s bond market has opened in positive territory as the market recovers some of yesterday’s late selling. The stock markets are showing minor gains with the Dow up 23 points and the Nasdaq up 5 points. The bond market is currently up 8/32, but we will still likely see an increase in this morning’s mortgage rates of approximately .375 of a discount point due to weakness late yesterday. 

There is no relevant economic data scheduled for release today. We do have the 7-year Note auction to be concerned with though. Yesterday’s 5-year Note sale went fairly poorly. Several measurements used to gauge investor demand showed well below average results. This means that investor appetite for the mid-term securities has not very strong. That gives us little to look forward to in today’s sale, which is more important to mortgage rates than yesterday’s securities were. 

Yesterday’s late selling was mostly a result of the weak auction. If today’s sale shows similar results, we may see more weakness in bond trading again this afternoon. Since the week is thin in volume due to many traders taking the week off, any reaction can be more noticeable than usual. This could translate into more volatility and further changes to mortgage rates. Results of the auction will be posted at 1:00 PM ET, so if we see the markets move as a result of the sale, it will come during afternoon hours.

The Labor Department will give us weekly unemployment figures early tomorrow morning. Due to the light volume this week, this data may also help influence the markets and mortgage rates more than usual. They are expected to say that 416,000 new claims for unemployment benefits were filed last week. That would be a small decline from the previous week. We usually don’t worry too much about this data because it tracks only a single week’s worth of new claims, but we should probably pay a little more attention to this particular release as it could impact mortgage rates slightly.

The bond market will close at 2:00 PM ET Friday and will reopen Monday for regular hours. The stock markets will not be recognizing the holiday with regular trading hours both Friday and Monday. Therefore, it is possible to see late afternoon changes to rates Friday if the stock markets make a big move upward or downward. Although I suspect we will see a fairly quiet afternoon as bond market participants, many stock traders and a good portion of the mortgage industry head home early for the holiday.

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 we re 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 December 29th, 2010 9:54 AM

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