Our Real Estate Blog

Mortgage Rates (2/23/2011)

February 23rd, 2011 2:56 PM by Lehel S.

Wednesday’s bond market has opened in positive territory again as yesterday’s rally appears to be holding, at least during early trading. Helping to boost bonds are more stock selling that has the Dow down 38 points and the Nasdaq down 12 points. The bond market is currently up 5/32, which should improve this morning’s mortgage rates by approximately .250 - .375 of a discount point over yesterday’s morning pricing.

The National Association of Realtors gave us this morning’s only relevant economic data. They announced that sales of previously owned homes rose 2.7% last month, exceeding forecasts that had called for a small decline in sales. This looks to be bad news for the bond market and mortgage rates because it indicates housing sector strength. However, the markets don’t seem to be too impressed with the data, partly because a high percentage of the sales were distressed or foreclosure transactions and not first-time buyers entering the market. There are also some accusations being made that the organization has been exaggerating the level of sales. Whether true or not, the rumors may have hurt the credibility of their postings.

Later today, we will get the results of the first of the two Treasury auctions that may influence bond trading enough to affect mortgage rates. The Treasury will sell 5-year Notes today and 7-year Notes tomorrow. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, strong sales usually make bonds more attractive to investors and bring more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates. 

Tomorrow also has two economic reports scheduled to be posted. The first is January's Durable Goods Orders data th at gives us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. A smaller increase than the 2.7% that is expected would be good news for the bond market and mortgage rates. This data is quite volatile from month-to-month, so large swings are fairly normal. 

January's New Home Sales report will be posted late tomorrow morning. This is one of the least important reports of the week, and is the sister report of today’s Existing Home Sales release. They measure housing sector strength and mortgage credit demand, but usually do not have a significant impact on bond trading or mortgage rates unless they show significant surprises. This report is also expected to show a decline in sales.

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... Fl oat 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 February 23rd, 2011 2:56 PM

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