Our Real Estate Blog

Mortgage Rates (12/3/2010)

December 4th, 2010 11:33 AM by Lehel S.

Friday’s bond market has opened in positive territory following the release of weaker than expected employment numbers. The stock markets are showing losses after the release, but by a far less margin than we would expect. The Dow is currently down 23 points while the Nasdaq is showing a loss of 3 points. The bond market is currently up 8/32, which should improve this morning’s mortgage rates by approximately .375 of a discount point from yesterday’s morning pricing.

The Labor Department said that the U.S. unemployment rate rose 0.2% last month to 9.8% when analysts were expecting no change from October’s rate. They also reported that 39,000 new jobs were added to the economy last month, falling well short of the 130,000 that were expected. And to complete the trifecta, average earnings remained unchanged compared to the 0.1% increase that was forecasted.

This is great news for the bond market and mortgage rates. At leas t it is supposed to be. As I addressed yesterday, these weak numbers did not come as a surprise. What is surprising is the relatively calm reaction to them. I would have expected a reversal of Wednesday’s selling, especially since this morning’s data carries much more weight than any of the nuggets of info that market bulls based the stock rally on. At the very least, today’s data underscores the fact that Wednesday’s economic optimism was certainly premature. I suspect we may see some weakness in stocks into closing as investors look to lock profits. If this is the case, we could bond prices rise this afternoon, possibly improving mortgage rates further.

October’s Factory Orders report was released this morning also. It showed a 0.9% decline in new orders at U.S. factories. This was a smaller drop than many had thought, so it can be considered negative for bonds. However, this data does not carry near the importance that the mon thly Employment report does. Therefore, this report has not had much of an influence on today’s trading or mortgage rates.

Next week’s calendar is fairly light in terms of economic data. There are only two reports scheduled for release and neither are considered to be highly important. They both will be posted Friday morning. In addition there are two Treasury auctions that are relevant to mortgage rates the middle part of the week. After this week’s volatility, the lack of relevant data may be welcomed. Look for more details on next week’s expectations in Sunday’s weekly preview.

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. 
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Posted by Lehel S. on December 4th, 2010 11:33 AM

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