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Mortgage Rates (3/3/2011)

March 4th, 2011 1:31 PM by Lehel S.

Thursday’s bond market has opened in negative territory following early stock strength and unfavorable economic news. The stock markets are showing sizable gains with the Dow up 156 points and the Nasdaq up 38 points. The bond market is currently down 17/32, which will likely push this morning’s mortgage rates higher by approximately .250 - .375 of a discount point, partly due to weakness late yesterday.

Revised productivity numbers for the 4th Quarter were posted early this morning. They showed that worker productivity rose at an annual rate of 2.6% last quarter, matching the preliminary estimate that was released last month. Analysts were expecting to see a downward revision to the index, making this a bit of good news for the bond market. Unfortunately, it does not carry enough significance to the markets for it to offset this morning’s bond selling and increases to mortgage pricing.

Helping to fuel this morning’s earl y stock gains and bond selling is last week’s unemployment numbers. Labor Department said early this morning that 368,000 new claims for unemployment benefits were filed last week. This was a noticeable decline from the previous week, particularly because an increase in claims was expected, and was the lowest number of new filings since May 2008. It is worth noting that this was the third decline in the past four weeks. These numbers help support those who feel the labor market is gaining traction and will turn the corner in the near future. Whether or not this is accurate remains to be seen, but since this news comes a day ahead of February’s monthly figures, the bond market is preparing for unfavorable news.

There are two reports scheduled for release tomorrow, with one being much more important to the markets and mortgage rates than the other. The Labor Department will be in the spotlight when they release February's Employment report at 8:30 AM ET. Some of the important portions of the report will give us the unemployment rate, number of new jobs added or lost and the average hourly earnings reading. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a large drop in payrolls and little or no increase in earnings. Current forecasts are calling for 0.1% increase in the unemployment rate to 9.1% and approximately 183,000 jobs added during the month. Weaker than expected readings would be great news for the bond market and should lead to lower mortgage rates tomorrow. However, stronger than expected numbers will likely fuel more bond selling and noticeable increases to mortgage rates. 

January's Factory Orders will also be released tomorrow, but during late morning hours. It will give us measurement of manufacturing sector strength. This data is similar to last week's Durable Goods, except this report covers orders for both durable and non-durable go ods. Current forecasts are calling for an increase in new orders of approximately 2.1%. A smaller than expected rise would be good news for the bond market, but the Employment report carries much more importance than this data.

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... Lock 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 March 4th, 2011 1:31 PM

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