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Mortgage Rates (3/1/2011)

March 2nd, 2011 7:17 AM by Lehel S.

Monday’s bond market has opened fairly flat despite early stock gains and mixed economic data. The stock markets are starting the week in positive ground with the Dow up 73 points and the Nasdaq up 14 points. The bond market is currently up 2/32, but we should see a small improvement in this morning’s mortgage pricing due to strength late Friday.

January's Personal Income ad Outlays data was posted early this morning, revealing a large jump in personal income but a smaller than expected rise in spending. The data showed that income rose 1.0% last month, greatly exceeding forecasts of a 0.3% increase. However, offsetting this negative news was a 0.2% increase in spending when analysts were looking for a 0.4% rise. This means that consumers earned more money than thought, but did not spend it. That basically makes this data neutral towards mortgage rates.

Tomorrow’s big news is the Institute for Supply Management’s (ISM) manufacturing index for February. This late morning release will help us measure manufacturer sentiment and can have a pretty large impact on the financial and mortgage markets if it varies from forecasts. It is expected to show a decline from January's 60.8 to 60.5 this month. This is important because a reading above 50.0 means more surveyed manufacturers felt business improved during the month than those who felt it had worsened, meaning likely growth in the manufacturing sector. If we see a weaker than expected reading, the bond market could rally as it would mean manufacturer sentiment slipped during the month. But, a higher than forecasted reading could lead to major selling in bonds, causing mortgage rates to rise tomorrow morning.

Fed Chairman Bernanke will deliver the Fed's semi-annual testimony on the status of the economy late tomorrow and Wednesday mornings. He will be speaking to the Senate Banking Committee tomorrow and the House Financial Services C ommittee Wednesday. Market participants will watch his words very closely. He is required to deliver this testimony twice a year, which is considered to be of extreme importance to the financial markets. We almost always see the markets move as a result of what he says during this testimony. Look for him to address the unemployment and housing sectors specifically and their impact on the overall economic recovery. His testimony begins at 10:00 AM ET with a prepared statement then is followed by Q & A with committee members. I am expecting to see the markets fluctuate during this session, possibly affecting mortgage rates also. 

Overall, look for a fairly active week for mortgage rates. Friday is undoubtedly the biggest day of the week, but tomorrow may also bring noticeable movement in mortgage rates. It is difficult to label a least important day with data being posted every day, but it appears that Thursday has the least influential data. However, we may see mo vement in rates several days this week, so please maintain contact with your mortgage professional if still floating an interest rate.

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 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 March 2nd, 2011 7:17 AM

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