April 16th, 2009 8:51 AM by Lehel Szucs
Thursday's bond market has opened in negative territory after yesterday's late stock rally has made bonds less appealing to some. The stock markets are mixed during morning trading with the Dow down 26 points and the Nasdaq up 10 points. The bond market is currently down 11/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.
Neither of today's two reports were likely to heavily influence mortgage rates. March's Housing Starts data came in well below forecasts, indicating that the new home part of the housing sector still remains weak. Even new permits, which are pulled prior to construction starting, fell much more than thought. While this is good news for bonds, its impact on today's trading and mortgage rates has been minimal because this data is not considered to be one of the more important reports we see each month.
The Labor Department announced this morning that 610,000 new claims fo r unemployment benefits were filed last week. This was much lower than the 658,000 that were expected. However, as with the Housing Starts data, these figures are not considered to be highly important. This time though, we can this is fortunate for mortgage rates because the drop in new claims indicates a stronger than expected labor market. Had this data been a monthly report, we may have seen a larger increase in this morning's rates than we did get.
Yesterday's Beige Book report didn't reveal any major surprises. It did show that many districts reported stabilizing in some economic indicators. This could be translated to mean that economic activity may begin to strengthen in the near future. However, it is well too soon to make that prediction yet. The report did reiterate a weak labor sector, which will make an economic recovery more difficult in the immediate future.
The final release of the week comes late tomorrow morning when the Univers ity of Michigan's Index of Consumer Sentiment will be posted. This index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial situations, they probably will delay making that large purchase. This influences future consumer spending data and can have a moderate impact on the financial markets. Good news would be a decline from March's 57.3 reading. Current forecasts are calling for a reading of approximately 58.5.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float 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.
©Mortgage Commentary 2009