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Mortgage Rates (3/6/2011 - The Week Ahead)

March 8th, 2011 7:44 AM by Lehel S.

This week brings us the release of three economic releases for the bond and mortgage markets to digest along with 10-year Treasury Note and 30-year Bond auctions. All of the data will be posted the latter part of the week. Only one of the three reports is considered to be of high importance to the markets, so several days will likely be influenced more by stock trading and other factors than the economic news of the day.

There are no relevant events scheduled for Monday or Tuesday. The 10-year Treasury Note auction is scheduled for Wednesday while the 30-year bond sale will be held Thursday. Results of both sales will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading as it would indicate that investors still have an appetite for longer-term securities. However, weak demand in the sale could lead to selling and an increase to mortgage rates. 

January's Goods and Services Trade Bala nce is the week's first economic data. It comes early Thursday morning and gives us the size of the U.S. trade deficit. It is the week's least important piece of news and likely will not influence mortgage rates much. Current forecasts are calling for a $41.5 billion trade deficit during January, but we will need to see a large variance from this estimate for the news to influence bond trading enough to affect mortgage pricing.

There will be two reports posted Friday morning. The first is at 8:30 AM and is the most important of the week. This is when the Commerce Department will post February's Retail Sales data. It is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the markets. This month's report is expected to show an increase in sales of approximately 1.0%. If Friday's release reveals a larger than expected incre ase, the bond market will likely fall and mortgage rates will move higher as it would indicate economic growth. If it reveals a much smaller than expected increase, I expect to see bond prices rise and mortgage rates improve Friday morning. 

Also on tap Friday is the University of Michigan's Index of Consumer Sentiment for March at 9:45 AM. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates. If the index rises, indicating that confidence is rising and spending will likely follow, we may see mortgage rates move higher late Friday morning. It is expected to show a reading of 76.5, which is would be a noticeable decline from February's final reading 77.5.

Overall, it will likely be another active w eek in the mortgage market. Friday will probably be the most important day of the week with the Retail Sales report due, while the calmest day could be tomorrow or Tuesday, depending on the stock markets. I am expecting to see the most movement in rates the latter part of the week, so please be careful 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... 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 8th, 2011 7:44 AM

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