Our Real Estate Blog

Mortgage Rates (2/9/2011)

February 10th, 2011 6:35 AM by Lehel S.

Wednesday’s bond market initially opened in positive territory but has given back a good portion of those gains. The stock markets are down slightly with the Dow down 18 points and the Nasdaq showing a loss of 10 points. The bond market is currently up 2/32, but due to weakness late yesterday we should be seeing a small increase in this morning’s mortgage pricing.

There was no relevant economic data posted this morning, but Fed Chairman Bernanke is speaking before the House Budget Committee. Whenever he is speaking publicly about the economy his words draw attention. This is especially true when he is in front of Congress. He hasn’t said anything surprising or that we haven’t heard before. His points of concern include the unemployment rate, even with the two month drop that brought it down 9.0% last month. He conceded that there are signs of strength, but noted that the economy has recovered only approximately 1 million of the es timated 8 million jobs that were lost during the recession. In other words, there are some signs of strength in the sector, but still plenty of hurdles to overcome.

He did hint at concern about fiscal policy and the size of our deficit. The growing amount of debt that the U.S. has sold to fund economic stimulus and programs, along with the size of the budget deficit has been an issue domestically and with overseas markets. Those concerns were apparent with some of the questions and comments from members of the committee. I am sure this topic will continue to come into discussion during the next few months.

Today also has the 10-year Note auction. Results of the sale will be posted at 1:00 PM ET. With the recent spike in yields, I would not be completely surprised to see this sale draw a fairly decent demand from investors. This would bode well for the bond market and mortgage rates as it should lead to higher bond prices and lower mortgage rates t his afternoon. But, a lackluster demand in the sale will likely lead to selling in bonds and upward revisions to mortgage rates.

Tomorrow’s only data are weekly unemployment figures from the Labor Department. They are expected to say that 410,000 new claims for unemployment benefits were filed last week. This would be a decline from the previous week, therefore, bad news for the bond market and mortgage pricing. The larger the number of new claims, the better the news for mortgage rates because it indicates weakness in the employment sector. Keep in mind though that this release tracks only a single week’s worth of new claims, so a wide variance from forecasts is usually needed for it to influence mortgage rates.

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 a nd 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 10th, 2011 6:35 AM

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