Our Real Estate Blog

Mortgage Rates (2/10/2011)

February 12th, 2011 7:01 AM by Lehel S.

Thursday’s bond market has opened down slightly despite new of a large drop in unemployment claims last week. Helping bonds is early stock weakness that has the Dow down 46 points and the Nasdaq down 12 points. The bond market is currently down 3/32, but we will likely still see an improvement of approximately .250 of a discount point in this morning’s mortgage rates due to strength late yesterday.

The Labor Department gave us this morning’s only economic data with the release of last week’s new unemployment claims. They announced that 383,000 new claims for unemployment benefits were filed last week, well short of the 410,00 that was expected. And more importantly, they broke the 400,000 threshold again that many consider a key sign of strength in the labor market. However, we should keep in mind that when claims fell below 400,000 last month, they spiked higher the following week. Therefore, the markets seem to be a little cauti ous to put much weight on today’s news.

As I somewhat predicted in yesterday’s commentary, the 10-year Note auction was met with a good demand from investors. Several readings we use to gauge success of these sales showed strength. That is good news for the broader bond market because it indicates that investors still have an appetite for longer-term securities such as mortgage-related bonds. The 30-year Bond auction is being held today. If we see a similar result in the 1:00 PM posting, we could see bonds rise during afternoon trading as they did yesterday. That could lead to downward revisions to mortgage rates later today.

Tomorrow morning has this week’s only monthly economic data. December's Goods and Services Trade Balance data is the first at 8:30 AM ET. This report measures the U.S. trade deficit and can affect the value of the U.S. dollar versus other currencies, but it usually does not cause enough movement in bond price s to affect mortgage rates. It is expected to show a $40.4 billion trade deficit. 

February's preliminary reading to the University of Michigan’s Index of Consumer Sentiment will also be released tomorrow morning, but at 9:55 Am ET. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows an increase in consumer confidence, the stock markets may move higher and bond prices could fall. It is currently expected to come in at 75.5, up from January's final reading of 74.2. That would indicate consumers were more optimistic about their own financial situations than last month and are more likely to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, this would be considered bad news for bonds and mortgage pricing.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock i f 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 February 12th, 2011 7:01 AM

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