Our Real Estate Blog

Mortgage Rates (4/13/2010 b)

April 13th, 2010 10:17 AM by Lehel S.

Tuesday's bond market has opened in positive territory again as the stock markets show minor losses after disappointing earning results from Dow component Alcoa. The Dow is currently down 14 points, but more importantly has fallen below the 11,000 mark it finally closed above yesterday. The Nasdaq is down 5 points. The bond market is currently up 4/32, which with yesterday's late strength should improve this morning's mortgage rates by approximately .250 - .375 of a discount point.

There was economic data posted today but it is not considered to be important to mortgage rates. February's Goods and Service Trade Balance was posted early this morning, revealing a larger than expected trade deficit of 39.7 billion. Since this data is aged and indirectly affects the bond market, it has had little impact on this morning's mortgage rates.

Tomorrow's data is a different story though. The Commerce Department will release March's Retail Sales data early tomorrow morning. This report gives us a measurement of consumer spending, which is very important because consumer spending makes up two-thirds of the U.S. economy. Forecasts are calling for a 1.2% increase in sales last month. If we see a larger increase in spending, the bond market will probably fall and mortgage rates will rise. However, weaker than expected results could push bond prices higher and mortgage rates lower tomorrow. 

March's Consumer Price Index (CPI) will also be released early tomorrow morning. This index is one of the most important pieces of data we see each month. It measures inflationary pressures at the consumer level of the economy. If inflation is rapidly rising, bonds become less appealing to investors because it erodes the value of their future fixed interest payments. This leads to bond selling and higher mortgage rates. There are two readings in the index that traders watch. The first is the overall readi ng while the second is the more important core data reading that excludes more volatile food and energy prices. Analysts are expecting to see a 0.1% increase in both readings. If we see larger increases, we could get higher mortgage rates tomorrow.

These reports are both important enough to cause significant movement in rates. Therefore, if we get conflicting readings, they could offset each other. That could mean little change in rates tomorrow. However, if they both show favorable or unfavorable results, we will likely see a noticeable change in mortgage pricing tomorrow. Therefore, 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 April 13th, 2010 10:17 AM



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